Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › make or buy: savings per unit
- This topic has 5 replies, 2 voices, and was last updated 1 year ago by
John Moffat.
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- August 28, 2022 at 4:51 pm #664536
hey!
While doing make or buy decision questions, we do savings per unit first, right? But what if a product’s purchase price from outside is cheaper than in-house? Do we calculate savings per unit and the following calculations for that product?
August 29, 2022 at 7:17 am #664561You do whatever is the cheapest for the company!
August 29, 2022 at 2:28 pm #664592I mean, say the purchase price from an outside supplier is $55 per unit and the total cost when made in-house is $56 per unit, so it is obviously cheaper to buy from the supplier, so do we calculate saving per unit for this product or we ignore it?
August 29, 2022 at 5:38 pm #664603If those were the figures (which would be very surprising in an exam question) and there were no other factors mentioned then you would certainly purchase externally. There would be no need to calculate the saving unless it was required as part of the question.
September 4, 2022 at 8:24 pm #665158THANKS ALOT!!!!
September 5, 2022 at 9:24 am #665194You are welcome 🙂
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