Question
Chimwendo manufactures three components, A, A and T using the same machine for each. The budget for the next year calls for the production and
Chimwendo manufactures three components, A, A and T using the same machine for each. The budget for the next year calls for the production and assembly of 4 00 of each component. The variable cost per unit of the final product is as follows: Machine hours Variable cost ($) 1 Unit of S 3 20 1 Unit of A 2 36 1 Unit of T 4 24 Assembly 20 100 Only 24 000 hours of machine time will be available during the year and a sub-contractor has quoted the following unit prices for supplying components. S = $29 A = $40 T = $34 Required (i) Calculate which components Chimwendo should manufacture and which should be supplied by the sub-contractor and the total cost components in that choice (ii) Advise the management of Chimwendo of your decision.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started