BestBuy Co. manufactures four components W, X, Y and Z; which are incorporated into their different electronics products. All the four components are manufactured using the same machine. The maximum number of machining hours available on this machine is 24,000 hours per week. BestBuy also has the option to purchase these components from external suppliers. Information pertaining to the production and purchase of the four components, per unit, is as follows:

BestBuys production budget shows the need for 1,500 units of each of the four components per week. Required: (i) Advise the production manager at BestBuy on which component(s) and how many units of this (each of these) component(s) should be purchased from the outside supplier. (ii) Advise the general manager at BestBuy on the relevant qualitative factors to consider before approving the production managers proposal to purchase components from outsider suppliers.

Al Production Cost: 18 15 15 10 Direct Material Direct Labour Variable Overhead Fixed Overhead 12 25 10 4 34 Total 46 23 Purchase price from outside supplier $57 55S54 $50 Machine hours needed per unit 3 hours 5 hours 4 hours 6 hours