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Bo is worried that this factory will approach 100% capacity soon. PSK has offered to produce identical ski clothing for a cost to SC of

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Bo is worried that this factory will approach 100% capacity soon. PSK has offered to produce identical ski clothing for a cost to SC of $35 per unit. Direct material cost per unit $12 Direct labour cost per unit $10 Allocated unit fixed cost of production $20 (based on 12 months to October 2016 with output of 500 000 units) SC profit margin on each item of ski clothing sold 50% (based on costs calculated in October 2016) (a) Refer to Table 1 and information on lines 48-53. Calculate the likely impact on SC's profits of a decision to outsource production of ski clothing to PSK. [6] Bo is worried that this factory will approach 100% capacity soon. PSK has offered to produce identical ski clothing for a cost to SC of $35 per unit. Direct material cost per unit $12 Direct labour cost per unit $10 Allocated unit fixed cost of production $20 (based on 12 months to October 2016 with output of 500 000 units) SC profit margin on each item of ski clothing sold 50% (based on costs calculated in October 2016) (a) Refer to Table 1 and information on lines 48-53. Calculate the likely impact on SC's profits of a decision to outsource production of ski clothing to PSK. [6]

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