Reference no: EM132556057

Questions -

Q1. A manufacturer is considering whether to make or buy a component used in its production. The annual cost of producing the 10000 is as follows

Direct Variable manufacturing Cost $ 300 000

Direct fixed manufacturing costs $100000

Allocated overhead $50000

If the manufacturing buys the component, the direct fixed manufacturing costs can be reduced by 69%. What is the maximum unit purchasing price that makes purchasing a beneficial decision in comparison to making?

Q2. Holt Pty Ltd presently makes 20000 units of a certain part to use in production. The cost to make the part is $20 per unit including $15 in variable costs and $5 in fixed overhead applied. If Holt buys the part from Bricker, the cost would be 418 per unit and the released facilities could not be used for any other activity. 75.6% of the fixed overhead would continue. Determine the total relevant costs to make the part.