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Junior Company currently buys 30,000 units of a part used to manufacture its product at R40 per unit Recently the supplier informed Junior Company that
Junior Company currently buys 30,000 units of a part used to manufacture its product at R40 per unit Recently the supplier informed Junior Company that a 20% increase will take effect next year Junior has some additional space and could produce the units for the following per-unt costs (based on 30,000 units) R16 Direct materials 121 Direct labor 121 Wanable overhead 10 Fixed overhead R50 Total 5 MDP135W OCTOBER NOVEMBER 2018 If the units are purchased from the supplier, R200,000 of fixed costs will continue to be incurred in addition, the plant can be rented out for R20,000 per year of the parts are purchased externally Required: Should Junior Company buy the part externally or make it internally
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