A machine tool manufacturing company sells its lathes at Rs. 36,500 each made up as follows: (a).
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A machine tool manufacturing company sells its lathes at Rs. 36,500 each made up as follows:
(a). A firm in Arabia has offered to buy 10 companys lathes at Rs. 28,500 each. Should the company be interested in the business?
(b). It has been decided to sell 5 such lathes to an engineering company under the same management at bare cost. What price should you charge?
Transcribed Image Text:
Direct materials Direct labour Variable factory overheads Fixed factory overheads Variable selling overheads Royalty Profit Central excise duty Sales tax There is enough idle capacity. Rs. 16,000 2,000 5,000 3,000 500 1,000 5,000 32,500 1,000 3,000 36,500
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a Selling 10 Lathes to the Firm in Arabia The companys cost structure for each lathe is as follows D...View the full answer
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