1. ABC limited produces 3 products X, Y and Z. The following information is available. It uses one type of material Alpha to produce all the three products.

Product X Y Z

Demand (units) 3,000 2,500 2,000

Variable cost to make ($ per unit) 14 15 11

Buy-in price ($ per unit) 13 18 12

Kg of Alpha required per unit 1kg 1.5kg 2kg

(Included in variable cost)

1. Explain problems involving capacity utilization in make or buy decisions. Support your answer based on the calculation done in part(b) above.