Short-term decision-making problem, Other Management

Assignment Help:

A company manufactures and sells a single product. The variable cost of the product is Rs 2.50 per unit and all production each month is sold at a price of Rs 3.70 per unit. A potential new customer has offered to buy 6,000 units per month at a price of Rs 2.95 per unit. The company has sufficient spare capacity to produce this quantity. If the new offer is accepted, sales to existing customers are expected to fall by two units for every 15 units sold to the new customer.

Required:

(a) Should the new offer be accepted and if accepted what would be the overall increase in monthly profit.

(b) In the short-term decision-making context, which ONE of the following would be a relevant cost?

- Specific development costs already incurred.
- The cost of special material which will be purchased.
- The original cost of raw materials currently in inventory which will be used on the project.

(c) Briefly illustrate what you understand by the term "sunk cost".


Related Discussions:- Short-term decision-making problem

Managerial economics, why is it important for managers to understand macro ...

why is it important for managers to understand macro economics

Bibliographic data formats, Bibliographic data formats Bibliographic d...

Bibliographic data formats Bibliographic data formats adopted for exchange of data consist of three basic components:  A defined physical structure: Rules for the arra

Printed book form - library catalogues, Printed Book Form: The printe...

Printed Book Form: The printed book form of library catalogue is one of its typical forms. These types of library catalogues are prepared conforming to all the standard princi

Organizational behaviour, case study solution for competent motors limited ...

case study solution for competent motors limited case

Management by objectives (mbo), Management by Objectives (MBO) Manageme...

Management by Objectives (MBO) Management technique is based on target-setting theory in which employees are given specific measurable goal to achieve. MBO has been shown to

Explain the term public relations, (a) Explain the term Public Relations (P...

(a) Explain the term Public Relations (PR) as per the British Institute of PR and illustrate the relevance and interdependence of i. PR and marketing and ii. PR and adverti

Advantages of contracting, We can conclude that contracting does have many ...

We can conclude that contracting does have many benefits which are mentioned below:  ?  Division of labour.  ?  Synergy of expertise.  ?  Sharing of risks.  To avoid

Cultivating communities of practice, C ultivating communities of practice ...

C ultivating communities of practice In an organisational life, the CoP has been readily accepted by people. It will flourish irrespective of whether the organisation recognis

Purchase and buy decision , Purchase and Buy Decision  The project mana...

Purchase and Buy Decision  The project manager or the production manager of a project has to decide whether to buy or make a part, so that it is available at the right schedule

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd