Mr X offers to buy from National Hardware Limited 5,000 hardware components for INR 40. The normal sale price of the product is INR 60 per unit. The company manufactures 75,000 units and its full capacity is 1,00,000 units per annum. The standard cost data is provided in . Determine if the company should sell the product to that customer or not. The company is operating above its breakeven point
Table 5.7 (a) Cost sheet of National Hardware Limited
|
Direct materials |
INR 10 |
|
|
Direct labour |
INR 14 |
|
|
Manufacturing overheads |
||
|
Variable overheads |
INR 10 |
|
|
Fixed overheads |
INR 6 |
INR 16 |
|
Total standard cost per unit |
INR 40 |
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