Go Go Company has an annual production of 10,000 units spare parts for machinery. The cost structure of the spare parts is as below: A 640 256 per unit per unit Material Labour Expenses: Variable Fixed Total 170 290 per unit per unit per unit 1,356 Required: (a) The purchase manager has an offer from a supplier who is willing to supply the spare parts at $1,150. Should the company manufacture or purchase the spare parts? (8 marks) Assume the resources now used for these spare parts manufacturers are to be used to produce another new product for which the selling price is $1,200. The material price is $600 per 10,000 units of this product can be produced on the same cost basis as above for labour and expenses. unit Required: (b) Advise whether the company should divert the resources to manufacture the new products, on the assumption that the spare parts presently being produced would, instead of being produced, be purchased from the market. (9 marks) Question 3 cont'd (c) Actual Production overhead Budget $16,000 10,000 Labour Hours $18,000 12,000 Required: Calculate the estimated overhead absorption rate and what is the amount of over or under absorption? (4 marks) (d) Classify the following cases are the responsibility centre, cost centre, profit centre, revenue centre or investment centre. (i) The chief executive officer of General Motors Europe is responsible for most of the company's operations in Europe. - list two relevant centres (2 marks) (ii) Check-processing departments: Standards can be established for check processing. Hospitals: Food service departments, laundries, and laboratories. list two relevant centres (2 marks)