Short-term decision-making problem, Other Management

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.


(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".

Posted Date: 10/22/2013 12:56:42 AM | Location : United States

Related Discussions:- Short-term decision-making problem, Assignment Help, Ask Question on Short-term decision-making problem, Get Answer, Expert's Help, Short-term decision-making problem Discussions

Write discussion on Short-term decision-making problem
Your posts are moderated
Related Questions
Need for Several Entries   A library catalogue can just meet any one type of user's approach like author approach, title approach, etc. We can also prepare catalogues, which ca

Q uality assurance plan The quality assurance plan is to establish the goals, the process and the responsibilities needed to implement the effective quality assurance function

Rajender Kumar was a production worker at competent Motors Limited (CML) which made components and accessories for the automotive industry. He had worked at CML for almost seven ye

Question 1: (a) Discuss the use of the following fuels in the Mauritian context. Comment specifically on their impact on the economy and on the environment. i. Coal ii.

Question 1: (a) Discuss, with the use of examples, the situations when, and the reasons why, people accept change. (b) How can employees' attitude toward change be classifie

moral responsibility and blame

RUNG PROCESS   In a library we classify and catalogue a book after it is acquired and entered in the Accession Register. After cataloguing the book, the entries will be filed i

Card Catalogue Cabinet -library furniture-library management This is perhaps the most important piece of equipment in a library used frequently by both the library staff and t

FEATURES FOR THE BEST PHYSICAL FORM OF LIBRARY CATALOGUE: Despite the widespread use of the computer for cataloguing, a great many catalogues in the conventional format, such

Question: You have been appointed as the Estate Manager of La Gaulette Integrated Resort. The project has just started and you have been appointed during the construction phas