[trees97]

The 10 marker in Section C on Gears and Brakes made no sense at all to me.
They gave us the yearly production, and the total costs associated to it.
The brakes’ Direct Labour Cost was 125,000 while the Gears’ Direct Labour Cost was 250,000.
Then the case study said that Direct Labour Cost was limited to 375,000.

Then they said that a new client wants 20,000 Brakes and 20,000 Gears; the case study specifically says that this would be on top of all the other production. They can alternatively import this from overseas.

But if production is limited by Direct Labour costs being 375,000, and the new client wants production on top of it, then surely ALL of the gears and brakes for the new client have to be outsourced to overseas? The normal production already takes up the Direct Labour Cost limit (125,000 + 250,000 = 375,000). So there is no room to make 20,000 gears and 20,000 brakes.
If anyone could explain where I’m wrong above that would be great!

[Author]

Posts