Question

A firm can purchase a separate part from an

outside source @ Rs.11 per unit. There is a

proposal that the spare part be produced in the factory itself. For this purpose a machine costing

Rs.1,00,000 with annual capacity of 20,000 units

and a life of 10 years will be required. A foreman

with a monthly salary of Rs.500 will have to be

engaged. Materials required will be Rs.4.00 per

unit and wages Rs.2.00 per unit. Variable

overheads are 150% of direct labour. The firm can

easily raise funds @ 10% p.a. Advise the firm

Whether the proposal should be accepted.​

Answer 1

Answer:

Fixation of selling prices

Explanation:

Although prices are more controlled by market conditions and other economic factors than by decisions of management yet fixation of selling prices is one of the most important functions of management.