A manufacturing company used raw material AA’ as the basic material. The cost of the material is Rs.50 per kg and the input—output ratio is 110%. Due to a sudden shortage in the market the material becomes non-available, and the unit is considering the use of one of the following substitutes available:
|
Material |
IO Ratio |
Rs. per kg. |
|
BB’ |
130% |
|
|
CC’ |
105% |
You are required to recommend which of the above substitutes is to be used. Also indicate additional cost to be incurred.