Question

Section C
Q7 a.A manufacturer produces a car component. The cost sheet of the component is as
follows:
(5)
Direct Material 4.00
Direct Labour 2.00
Variable Overheads 1.50
Fixed Overheads 2.50
A foreign manufacturer who uses this car component offers to purchase 20,000 units at Rs. 13
per component against the usual price of Rs. 15 per unit. If this offer is accepted the fixed
expenses will go up by Rs. 40,000 annually.
Would you accept this offer? Are there any other considerations, which may affect your
decision?​

Answer 1

Answer:

Explanation:

Give me brainiest but I don’t know the answer though. I really need brainiest because my brother bullies me as he has more brainliests than me.

Answer 2

Explanation:

The offer should only be accepted if there are some vetter future prospects to this such as the client commits for long term contract for future with better rates. Also due to bilk production the car company should try to reduce its variable cost and look for alternatives in fixed overheads so that the difference can be compensated and to make this contract beneficial for the car company