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make or buy decision

Forums › ACCA Forums › ACCA PM Performance Management Forums › make or buy decision

  • This topic has 1 reply, 1 voice, and was last updated 7 years ago by ACCAstudent.
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  • December 1, 2015 at 2:54 pm #286739
    ACCAstudent
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    • Topics: 10
    • Replies: 15
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    Question Robber Co (6/12)

    variable cost (machine setup cost) of making in batches of 500 is 22000, now they are changing to batches of 400. what will be the cost now?
    in the answer 22000 is multiplied by 500/400. this gives a higher cost than before, which is when they were produced in batches of 500. i thought this change would decrease the setup cost and the answer should be calculated by cross multiplying, 22000 multiplied by 400/500. could you explain?

    December 1, 2015 at 3:26 pm #286743
    ACCAstudent
    Participant
    • Topics: 10
    • Replies: 15
    • ☆

    please ignore this question. thankyou

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