Solution-Should junior company buy the part externally

Should junior company buy the part externally

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Reference no: EM132663704

Junior Company currently buys 30,000 units of a part used to manufacture its product at R40 per unit Recently the supplier informed Junior Company that a 20% increase will take effect next year Junior has some additional space and could produce the units for the following per-unit costs (based on 30,000 units)

Direct materials R16

Direct labor Vanable overhead

Fixed overhead Total R50

If the units are purchased from the supplier, R200,000 of fixed costs will continue to be incurred addition, the plant can be rented out for R20,000 per year if the parts are purchased externally

Required:

Problem 1: Should Junior Company buy the part externally or make it internally?

Reference no: EM132663704

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Should junior company buy the part externally

Reference no: EM132663704

Reference no: EM132663704

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