An answer for A and B if possible.

o 1 of 1 + 75% 9 Q. 8(a) (6 marks) Make - Buy - Difference - Direct materials Direct labour (10 marks) 0.8 A. and Partners LTD wishes to decide whether to manufacture or buy 20,000 components. The following information has been made available: Total - Direct materials 150,000 Direct labour 70,000 Variable overhead costs 40,000 Fixed overhead costs 60,000 Non-manufacturing overhead costs 30,000 Variable manufacturing overhead costs Fixed manufacturing overhead costs Share of non-manufacturing overheads Purchasing cost Total costs IF A. and Partners LTD buy 20.000 components at 10 each, then: 1 75% of the Direct labour is made redundant 2 50% of the Direct materials become avoidable 3 25% of the Variable Overheads become avoidable 4 Fixed Overhead will be reduced by 30,000 5 Non-manufacturing Overheads remain unchanged Assume that the manufacturing capacity has no alternative uses. Maximum marks: 6 Requirements: a Please state whether the company should manufacture or buy the 20.000 components. (6 marks) b Assume that the company can rent out its manufacturing capacity for 50,000. (4 marks) Should the company make or buy the 20,000 components? Please explain your rationale.