Assume that ABC Ltd makes four components with the following information:

W

X

Y

Z

production (units)

1000

2000

4000

3000

Direct marginal costs

Direct material

4

5

2

4

Direct labour

8

9

4

6

VA variable O/H

2

3

1

2

14

17

7

12

Attribute Fixed CostSub contractor price

Sh.Sh.

TOW1000W12

X5000X21

Y6000Y10

Z8000Z14

Committed Fixed Costs are Sh.30000

Required

Advise the company on the components to buy or make if any.(15 marks)