A firm can purchase a separate part from an outside source @ Rs.11 per unit. There is
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Question:
A firm can purchase a separate part from an
outside source @ Rs.11 per unit. There is a
proposal that the spare part be produced in thefactoryry itself. For this purpose a machine costing
Rs.1,00,000 with annual capacity of 20,000 units
and a life of 10 years will be required. A foreman
with a monthly salary of Rs.500 will have to be
engaged. Materials required will be Rs.4.00 per
unit and wages Rs.2.00 per unit. Variable
overheads are 150% of direct labour. The firm can
easily raise funds @ 10% p.a. Advise the firm
Whether the proposal should be accepted.
Related Book For
Accounting
ISBN: 978-0324662962
23rd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
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