Reference no: EM132999861

Questions -

Q1) A manufacturer is considering whether to make or buy a component used in its production. The annual cost of producing the 10,000 parts is as follows.

Direct variable manufacturing costs $300,000

Direct fixed manufacturing costs $100,000

Allocated overhead $50,000

If the manufacture buys the component, the direct fixed manufacturing costs can be reduced by 73 per cent. What is the maximum unit purchasing price that makes purchasing a beneficial decision in comparison to making?

Q2) Mel Ltd manufacturers a number of specialised electronic components, including B2 Sensors. Mel Ltd has the capacity to produce 10,000 units of B2 per year. Currently it is operating at 80 per cent capacity. The selling price for B2 is $100 per unit. The variable cost per unit is $26. Fixed cost allocated to producing B2 is $100,000 per year. Mel Ltd receives a special order for 3,000 units of B2. The opportunity cost associated with taking this special order is?

Q3) A firm makes three products, Alpha, Beta and Gamma.

Alpha Beta Gamma

Sales price per unit $7.00 $10.00 $13.00

Variable cost per unit $4.00 $2.00 $10.00

Demand 5,000 4,000 1,000

Machine hours used 0.5 2 1

The total available machine hours is 11,467.

How many of Gamma should be in the product mix to maximize the profit?