The cost per unit of the three products A, B and C of a concern are as follows:

The cost per unit of the three products A, B and C of a concern are as follows:

Particulars

A (Rs.)

B (Rs.)

C (Rs.)

Variable Cost

20

20

18

Fixed Cost

3

3

2

Total Cost

23

23

20

Profit

9

7

6

Selling Price

32

30

26

No. of units Produced

10,000

5,000

8,000

Production arrangements are that if one product is given up, the production of the others can be raised by 50%. The directors propose that C should be given up because the contribution in that case is the lowest.

Do you agree? What other non-cost considerations should be kept in mind before taking any decision in such a situation?