Question
Annuar manufactures several components for a closk radio and assembles these part as well. Recently he noticed that the amount of time and resources spent
Annuar manufactures several components for a closk radio and assembles these part as well. Recently he noticed that the amount of time and resources spent on making those individual components is too much. The production manager advised him that some components can be bought from a supplier, which will spare capacity for the production of more clock radios. Gis companys information for the year ending 2017 is as follows: Cost of buying components A134: RM0.90 Cost of making components A134: Materials RM0.45 Labour RM0.20 Overhead RM0.10 Machine capacity is at an annual fixed cost of RM15,000. Required: Advice Annuar if components A134 should be manufactured or purchased.
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