Popular company produces various articles for student purposes. It has been in industry since last 25 years. Company had a very humble start but…

Popular company produces various articles for student purposes. It has been in industry since last 25 years. Company had a very humble start but gained popularity over the years due to excellent quality products which were sold at very competitive prices. Company has huge reserves and feel that it is also obligated to give back to the society from which it has grown. Last year management decided to produce and supply special quality school bags, water bottles, & geometry boxes to NGOs, at no price, as a social responsibility. These articles were simple looking but were more durable, that would not have wore-off easily and could have been used for long-term. This year management wants to add another dimension to this social work. It approached charitable schools and government run schools and offered them the supply of the same articles, at cost. This will help students in these schools to get these things at a very low price compared to market. The variable costs are - 100,80, and 40for school bags, water bottles, and geometry boxes, respectively. These articles are made using a single machine. 0.20 hours of machine operation is required for manufacturing 1 unit of school bag. Similarly, machine hours required for each units of water bottle and geometry box is 0.15 hours and 0.10 hours, respectively. Fixed overhead related to machine is 7,40,000 per year. Machine can operate for 8,000 hours in a year. Company has decided to sell its 80% capacity production in markets. Rest is divided amongst the 2 undergoing social works, equally. All Schools requests these items in the ratio of 2:3:5, as per their demand by the school students. Company wants to set a price for these articles to be offered to the schools. Management has few questions they need the answers to. They assigned the task to their team. Team made rough calculations but as there were too many people on the team, each came up with different answers. As a Chartered accountant, you have been approached. Understand the case closely, find the correct answers and help management to set a price. Answer the following: