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Clock produces clocks and sells 150 units per year. The following estimated production costs per unit were provided: RM Direct material 200 Direct labour 150
Clock produces clocks and sells 150 units per year. The following estimated production costs per unit were provided: RM Direct material 200 Direct labour 150 Variable manufacturing overhead 130 Fixed factory overhead (40% avoidable) 400 An outside supplier has offered to produce the clocks for RM600 per unit. a) Calculate the total relevant costs to purchase the 150 units of clock from outside supplier. b) Calculate the total relevant costs to manufacture the 150 units of clock. c) Should Clocky Clock purchase or manufacture the 150 units of clock? Why
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