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Case-2: Relevant Cost and Decision Making (Marks: 10) Deco Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The company has

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Case-2: Relevant Cost and Decision Making (Marks: 10) Deco Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The company has always produced all of the necessary parts for its engines, including all of the carburetors. As outside supplier has offered to produce and sell one type of carburetor to Deco Engines, Ltd., for a cost of Tk 38 per unit. To evaluate this offer, Deco Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally: Direct materials Direct labor Items/Costs Variable manufacturing overhead Per Unit Tk. 10,000 Units per Year Tk. 18 180,000 12 120,000 5 50,000 6* 60,000 70.000 Total cost 48 480.000 * Two-third supervisory salary and rest one-third depreciation of special equipment that has no resale value. Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated 7 Required: Assume that the company has no alternative use for the facilities that are now being used to produce the carburetors, should the outside supplier's offer be accepted? Show all computations

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