Rose Ltd uses iron as a raw material for the manufacture of four finished products. At the beginning of the period, 10,000 units of iron in stock were purchased for Rs. 90 per unit. In case the company decides not to use those 10,000 kg of iron in stock, they can be sold to a scrap dealer for Rs. 50 per unit. Another scrap dealer has offered Rs. 48 per kg unit for the same. The expected future revenues and labour overheads for each unit of the product is as follows:
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B Rs. |
C Rs. |
D Rs. |
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Sale per unit Labour &overhead per unit: |
120 40 |
100 30 |
90 |
95 |
You are required to decide which would be the best alternative? Apply opportunity-costing approach.
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