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sir, I need explanation for this question from kaplan.
p considering whether continue making or to buy.
It uses 12,000 components /year.
internal manufacturing costs:
$/unit
direct material 3.00
direct labour 4.00
variable o.h 1.00
specific fixed cost 2.50
other fixed cost 2.00
total 12.50if the labour were not used to manufacture the components, it would be used to increase
the production of another item for which there is unlimited demand. This other item has a contribution of $10.00 per unit but requires $8.00 of labour per unit.what is the maximum price per component, at which buying is preferable to internal manufacture?
https://opentuition.com/topic/relevant-costing-63/
I hope this may help you muhammed ethisam.
Adarsh: Please do not answer in this forum, because it is Ask the Tutor and you are not the tutor 🙂
Muhammed ethisam: Please do not simply type out full questions here and expect an answer. You must have an answer in whatever book you found the question and so you should ask about whatever it is in the answer that you are not clear about – then I will help you.
And do watch my free lecture on make or buy decisions. My lectures are a complete free course for Paper F5 and cover everything needed to be able to pass the exam well.
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