AMA

AMA

Question 8: New Ltd. Plans to completely manufacture a single product Z whose selling price and variable manufacturing costs will be complete production is done at its own factory, fixed machining costs will be 13,62,000 and find 100 per unit and 80 per unit respectively. If the administration and selling overheads will be ? 30,000 for the production period. Alternatively, the product can be finished outside by subcontracting the machining operations at 10 per unit, but this will entail an increase in the fixed administration overheads by ? 1,20,000 while fully avoiding the machining cost of 3,62,000 Based on the production, od on the above figures and assuming a production capacity of 30,000 units for the duction period, advise with relevant sun th relevant supporting figures, from a financial perspective, for what mes of market demand will: (A) a manufacture be recommended at all? - all Manawe in a fully in-house production be recommended? (Nov-2011 (iii) the sub contracting option be recommended ? Min find costs are E. and F. Ye