Health Management Associates Inc. The following figures are obtained from the budget

| September 12, 2016

Question
Health Management Associates Inc.

The following figures are obtained from the budget of Health Management Associates Inc. which is at present working at 90% capacity and producing 13,000 units per annum.

90%

$

100%

$

Sales

15,00,000

16,00,000

Fixed Expenses

3,00,500

3,00,600

Semi- Fixed Expenses

97,500

1,00,500

Variable Overhead Expenses

1,45,000

1,49,500

Units made

13,500

15,000

Labour and material costs per unit are constant under present conditions. Profit margin is 10 per cent.

a) You are required to determine the differential cost of producing 1,500 units by increasing capacity to 100 per cent.

b) What would you recommend for an export price for these 1,500 units taking into account that overseas prices are much lower than indigenous prices?

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