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(b) Explain how your above advice would be affected by each of the two separate situations shown below. (i) As a result of recent government
(b) Explain how your above advice would be affected by each of the two separate situations shown below. (i) As a result of recent government legislation if Springer plc continues to manufacture this component the company will incur additional inspection and testing expenses of $56 000 per annum, which are not included in the above budgeted manufacturing costs. (3 marks) (ii) Additional labour cannot be recruited and if the above component is not manufactured by Springer plc the direct labour released will be employed in increasing the production of an existing product which is sold for $146 and which has a budgeted manufacturing cost as follows: (E) Direct material 10 Direct labour (8 hours at {10 per hour) 80 Variable overhead (8 hours at (2 per hour) 16 Fixed overhead (8 hours at $5 per hour) 40 146 per unit
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