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PART (B)
Sir, i am not able to calculate the variable cost of making (231500 & 208320) for keypads and display screens.
in book variable cost of making is (231500/80000) for keypads and (208320/80000) for display screen
ACC TO my calculation cost of making (i.e keypads)
in thousand(000)
material – 164
labour 40
h&p 44
setup cost (variable) 27.5in(000)
its 275.5 for keypads and 266.32 for display .please correct meThe heat & power is a fixed cost not variable
material 164
labour 40
setup cost (variable) 27.5 which equals 231.5Then attributable fixed costs
h&p 44
fixed m 4
deprec and ins 33.6 which equals 313.1 in totalCost of buy 328 giving a diff of 14.9
then sir what this mean
answer given back
Note 1- it is equally as acceptable to have treated the heat and power costs as variable and include them in the above. It will not have changed the outcome and is entirely acceptable interpretation of the scenario.hi sir
in this question how do we understand that the fixed cost in machine setup is a relevant cost and it is
avoidable?In note 4 it states that machine costs are semi-variable in nature
So that means they are mixed variable and fixed
It tells you that fixed are 4000 & 6000 which is relevant to assessing whether to buy in or make
If you buy in v cost of making VC + FC
Don’t get hung up on the alternative method look at the original one.
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