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b) ZADOC Itd manufactures component A which requires materials X and Y. The material can be manufactured internally or purchased externally from an external supplier
b) ZADOC Itd manufactures component A which requires materials X and Y. The material can be manufactured internally or purchased externally from an external supplier at a price of Ksh. 120 and Ksh. 240 for materials X and Y respectively. The cos accountant has provided the following schedule sharing the production cost per unit. X Y Direct materials 60 180 Direct labour 24 48 Fixed overheads 60 84 Totals 144 312 Fixed attributable cost is expected to be Ksh 12 for component X and Ksh 48 for component Y. Required; i. Advise management whether to buy or manufacture the components. (8mks)
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