12:34 PM o . 63..\" 1l1'iulf a:- Rea... v ' wll Am 3 ' Outline the vaiious decision areas when: the concept of relevant concept could he applied and briey discuss how a management accountant can use make or buy analysis and the limiting facionm'uces to achieve optimal solutions to an intemal management problem. APPLICATION OF KNOWLEDGE [PRACTICAL] QUESTIONS Page 2 TUTORIAL QUESTIONS-COST & MGT ACCT lI QUESTION 10 Big-Den Company limited has received an order to manufacture a special product and certain part of the product could be outsourced. Currently the company is considering of buying that part outside. The following information relates to the unit cost of making the part inhouse: GH Direct Material 2?0.00 Direct Labour 150.00 Variable Overhead 30.00 Depreciation of special equipment 90.00 General FACTORY Overhead 300.00 Total 840.00 i. General factory overhead is allocated on the basis of direct labour hours and is not going to change if the parts are bought from outside. ii. The GH840.00 unit cost is based on 20,000 parts produced each year by Big Ben Company Limited. iii. An outside supplier has offered to provide the 20,000 parts at a unit cost of GHT00.00 per part. REQUESTED: Advice with evidence whether Big-Ben limited should accept die supplier's offer or not. QUESTION 11 Eben Co. ltd produces computer component A for sale at GH4?.00 per unit to a Manufacturer of computers. The company cun'ently produces 15,000 units of the component per annum. Total cost of production and unit cost are as follows: Page 3 TUTORIAL UESTIONS-COST 8x MGT ACCT lI