Vas & Co. Ltd is engaged in trading business and uses its own building for the purpose. The data obtained from the records of the company show the estimates as follows:
|
Cost of goods sold per annum |
70,000 |
|
Other operating expenses per annum |
40,000 |
|
Building ownership costs p.a. |
|
|
(Rent and rates and maintenance and |
15,000 |
|
insurance charges for building are not |
|
|
included above |
|
|
Sales per annum |
2,50,000 |
Another firm has offered to take the building on lease for Rs. 7,500 per month. In this case, Vas & Co. Ltd would have Rs. 7,500 per month. In this case, Vas & Co. Ltd would have to discontinue its operations and handover the building to the lessee.
You are required to take a decision using opportunity-costing approach.