Mona Electricals Ltd. is operating at 75 percent capacity. Its fixed overheads are 1,20,000. The company...

Transcribed Image Text:

Mona Electricals Ltd. is operating at 75 percent capacity. Its fixed overheads are 1,20,000. The company is presently buying one of it's parts fromthe market at 6 per unit. If it makes it in its own factory, the per unit cost would be as under: 1. Materials Factory overheads *2.50 1.20 Wages 2.00 If it works at full capacity, it can manufacture 60,000 units. The Cost Accountant has prepared the following statement and has presented that it would be costlier to make the part and buying it from outside would be cheaper. Mona Electricals Ltd. is operating at 75 percent capacity. Its fixed overheads are 1,20,000. The company is presently buying one of it's parts fromthe market at 6 per unit. If it makes it in its own factory, the per unit cost would be as under: 1. Materials Factory overheads *2.50 1.20 Wages 2.00 If it works at full capacity, it can manufacture 60,000 units. The Cost Accountant has prepared the following statement and has presented that it would be costlier to make the part and buying it from outside would be cheaper.

Answer rating: 100% (QA)

The detailed ... View the full answer