Advice the management as to the action they should take

Assignment Help Financial Management

Reference no: EM131753627

A company produces 2 modules of mobile phones.

1. Basic modle is sold 5000/=, direct material cost 1250/=, requires 0.25h labour time. Produce unites 8000 per month.

2. smart model is sold 7500/=, direct material cost 1630, take 0.375h, Produce unites 4000 per month

3. labour rate per hour: Rs 6000/= and currently very scared.

fixed cost: Rs 24000000 per month.

4. An overseas customer has offered the company a contract worth Rs 35000000 for a number of mobile phones to be manufactured to its requirements.the estimating departmenthas ascertaained the following facts in respect of the work.

*labour time would be 1200hrs
*material cost would be Rs 9000000 plus the cost of particular components not normally used in the company''s models.
*these components could be purchased from a suplier for Rs 2500000 or alternatively they can be made internally for matirial cost of Rs 1000000 and additional time of 150hrs.

REQUIREMENT:

Advice the management as to the action they should take.

Reference no: EM131753627

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