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Product X is manufactured By ABC company, The sales is Rs 50,000 Direct Materials is Rs 20,000, Direct Labour is Rs 10,000, Variable overheads is Rs 5,000 and Fixed overheads is Rs 10,000. ABC Company now intends to introduce a new product Y so that sales may be increased by Rs 10,000. There will be no rise in fixed costs and the estimated variable costs of Product Y are Labour Rs 2,200 Materials Rs 4,800 Overheads Rs 1,400. If the company introduces Product Y, what will be the impact?

A. Total profit will decrease by Rs 1,600

B. Total profit will increase by Rs 1,600

C. No impact

D. None of the above

Related Questions on Management Accounting Test Questions

Time value of money indicates that

A. A unit of money obtained today is worth more than a unit of money obtained in future

B. A unit of money obtained today is worth less than a unit of money obtained in future

C. There is no difference in the value of money obtained today and tomorrow

D. None of the above