Rama & Co. Ltd is engaged in trading business and uses its own building for the purpose. The following data available from the firm’s records show the estimates made by the company:
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1,00,000 |
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Other operating expenses per annum |
75,000 |
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Building ownership costs per annum |
37,500 |
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Sales per annum |
3,00,000 |
Another firm has offered to take the building on lease for Rs. 8,000 p.m. In this case, Rama & Co. Ltd would have to discontinue its operations and hand over the building to the lessee.
You are required to take a decision using opportunity-costing approach.
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