both part should be done

estion 2 3 of 6 rart A Sample question with answer Bo Digital company has the capacity of producing 50,000 units annually. Budgeted operating results for 2020 are given below on the table Sales [40,000 @ $28) Variable costs: Manufacturing (40,000 at $4.60] Selling (40,000 at $0.95) Admin (40,000 at $1.20) Fixed Cost Manufacturing S64,000 Selling & administrative S 16,000 Show all your workings A customer wants to buy 15,000 units at a price of $20 per unit. All fixed cost will decrease by 10% if the special order is accepted. Variable manufacturing costs would increase by 15% per unit for the special order only REQUIRED Determine whether the company should produce the special order or not Show all workings and use the format provided in review Part B BUY OR MAKE Question Buzz LDT management is making a decision of whether to make a part that is used in the making of a Product or to buy it from an outside supplier. Based on its financial report, it seems it costs the company S73.00 per unit to make the component. The cost is broken in the following manner S Direct materials 50,000 Direct Labor 58,000 Variable Manufacturing Overhead 28,000 Fixed Manufacturing Overhead 10,000 Company uses 2000 components per year An supplier, John LTD offered to provide the part at $78.00. Some of the managers believed that they have to consider the proposal because the company may save on the cost If the company buys the part from the supplier, it can save 10% of fixed manufacturing overhead per unit and the company can rent a part of the factory for $ 12,000 if production of that part is not produced. REQUIRED Based upon relevant cost differences, should company make or buy the component. Show the calculation [ 40 marks ]