Bpp revision kit question 164

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August 11, 2021 at 5:50 pm #631246
hm1995
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Hello
I was solving the question 164 (a), and on the anwers it shows that the fixed costs of Machine of $4000 and $6000 respectively were added to calculate the cost of making the two products in-house in order to be compared against buying those units.
Im confused as to why are those costs added while the question says they are fixed costs and so they will be incurred even if those units are not made.
August 12, 2021 at 8:33 am #631292
John Moffat
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As per note 4 of the question, they are specific fixed costs and therefore the fixed costs for keypads will only be incurred if they are making keypads in-house. Similarly for the display screens.
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