A company has an installed production capacity of 1,00,000 units and presently it is working at 70% capacity utilization. As the production capacity utilization increases, the cost per unit decreases as follows:
|
Capacity Utilization |
Cost per Unit (Rs.) |
|
70 % |
97 |
|
80 % |
92 |
|
90 % |
87 |
|
100 % |
82 |
The company has received three export orders from different sources as follows:
|
Source A |
5,000 units at Rs. 55 per unit |
|
Source B |
10,000 units at Rs. 52 per unit |
|
Source C |
10,000 units at Rs. 51 per unit |
Advise the company whether any or all of the export orders should be accepted or not.