The cost per unit of a product manufactured in a factory amounts to Rs 160 (75% variable) when the production is 10,000 units. When production increases by 25%, the cost of production will be Rs per unit.

The correct answer is: C. Rs 152

The cost per unit of a product manufactured in a factory amounts to Rs 160 (75% variable) when the production is 10,000 units. This means that the variable cost per unit is Rs 120 (75% of Rs 160) and the fixed cost is Rs 40 (100% – 75% = 25%).

When production increases by 25%, the new production level will be 12,500 units. The new variable cost will be Rs 150,000 (12,500 units x Rs 120 per unit). The new fixed cost will remain at Rs 40,000.

The new cost per unit will be Rs 152 (150,000 + 40,000) / 12,500 units.

Here is a brief explanation of each option:

• Option A: Rs 145. This is incorrect because the cost per unit is not expected to decrease when production increases.
• Option B: Rs 150. This is incorrect because the cost per unit is not expected to remain the same when production increases.
• Option C: Rs 152. This is the correct answer because the cost per unit is expected to increase by 2% when production increases by 25%.
• Option D: Rs 140. This is incorrect because the cost per unit is not expected to decrease by 2% when production increases by 25%.