sun1, here is the explanation:
1) The Estimates:
Currently the manager is making Rs10 profit per unit. Thats Situation 1, evident from the given data that the cost is
Total Cost = Fixed cost + Variable Cost
Total Cost = 30 + 60
Total Cost = Rs90 per unit,
Profit = 100 - 90 = Rs10 per unit
Since, the total productive capacity is not being utilized, there is a scope of increasing it.
Now, lets say the Manager has increased the productive capacity to 100%,
Thus, the fixed cost per unit decreases
Let the Total Production Capacity was "Y"
Original Production = 0.7*Y ( Producing at 70%)
Total Fixed cost = 30 * 0.7*Y
Now take the Case of Full Production. ( The fixed cost remains same )
Total Fixed Cost = 21Y
Fixed cost per unit = 21Y / Y
= Rs 21
Thus, the Fixed cost per unit has decreased from Rs 30 to Rs 21
Total Cost = Fixed Cost + Variable Cost
Total Cost = 21 + 60 = Rs 81
Profit = 100 - 81
= Rs 19 ( Situation 2)
2) Yes, the Export business should not be taken up as even after producing at full capacity, the selling price is Rs 6 less than the Cost of Rs 81.