Analyze the following case and answer the questions given under it.

Orphat Industries manufactures pocket calculators for the Indian market. It has an installed capacity of 100000 calculators per annum. At present, the firm operates at 30 percent of its installed capacity. The total fixed costs for the firm are Rs: 500000

and variable cost per unit is Rs. 51-00 per unit. In the Indian market, the firm follows cost plus pricing policy with 5% profit margin. Recently, the firm got an enquiry from National School System of Indonesia for supply of 50000 calculators at a take it or leave it price of Rs. 54-00 per calculator. It would be a one time order to be executed in three months time. The National school system

would distribute the calculators to all the school children studying in its 20 schools

spread over Indonesia. It has given a commitment to Orphat industries that it would

not resell any of its purchases in the Indian market, either directly or through other

vendors

1. Estimate the price at which the firm sells its calculators in the Indian market. (5) marks)

2. Should the firm accept or reject the order from the National School System?

Substantiate your answer. (5 marks)

3. In case the firm decides to accept the offer, what kind of pricing strategy would

it be following? (5 marks)

4. Estimate break-even point for the firm on its domestic sales. (5 marks)