Question
Kolachi Company manufactures motorcycles and purchases a major component from another firm. The Company has a significant amount of idle capacity. Kolachi has been purchasing
Kolachi Company manufactures motorcycles and purchases a major component from another firm. The Company has a significant amount of idle capacity. Kolachi has been purchasing the component for Rs.270. The controller has said that the component could be produced internally at the following costs:
Direct Materials Rs.150
Direct Labor 75
V.MOH 25
F.MOH 50
Total Rs.300
Required:
- Identify the following for the company
- Unavoidable costs
- Relevant and differential costs
- Based on your analysis, should Kolachi continue to purchase the equipment?
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Handbook On Energy Audit And Environment Management
Authors: Y.P. Abbi, Shashank Jain
1st Edition
8179930920, 978-8179930922
