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HHGregg Co. manufactures four components A, B, C and D; which are incorporated into their different electronics products. All the four components are manufactured using
HHGregg Co. manufactures four components A, B, C and D; which are incorporated into their different electronics products. All the four components are manufactured using the same machine. The maximum number of machining hours available on this machine is 24,000 hours per week. HHGregg also has the option to purchase these components from external suppliers. Information pertaining to the production and purchase of the four components, per unit, is as follows: Production Cost: Direct Material 12 25 18 15 13 Direct Labour Variable Overhead 4 Fixed Overhead Total Purchase price from outside supplier Machine hours needed per unit 56 45 32 23 $50 6 hours $57 $55 $54 3 hours 5 hours 4 hours HHGregg's production budget shows the need for 1,500 units of each of the four components per week. ACC210: Accounting for Decision Making and Control Jan 2019 Semester (i) Advise the production manager at HHGregg on which component(s) and how many units of this (each of these) component(s) should be purchased from the outside supplier Advise the general manager at HHGregg on the relevant qualitative factors to consider before approving the production manager's proposal to purchase components from outsider suppliers. (ii)
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