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4 Garland limited makes four components. A, B, C, and D, for which costs in the forthcoming years expected to be as follows. Production (units)
4 Garland limited makes four components. A, B, C, and D, for which costs in the forthcoming years expected to be as follows. Production (units) Unit marginal cost Direct materials Direct labour Variable production overhead A B C D 1,000 2,000 4,000 3,000 RM RM RM RM 4 5 2 4 8 9 4 6 2 3 1 2 14 17 7 12 A total of RM50,000 fixed cost is expected to be incurred and the following shows the behavior of these fixed cost: RM Incurred as a direct consequences of making A Incurred as a direct consequences of making B 1,000 5,000 Incurred as a direct consequences of making C Incurred as a direct consequences of making D Other common fixed cost 6,000 8,000 30,000 50,000 Total A sub-contractor has offered to supply A, B, C and D for RM12, RM21, RM10, and RM14 respectively. REQUIRED Decide whether Garland Ltd. should make or buy the components
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