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Junior Company currently buys 30000 units of a part used to manufacture its product at R440 per unit. Recently the supplier informed Junior Company that
Junior Company currently buys 30000 units of a part used to manufacture its product at R440 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-unit cost (based on 30000 units): 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 if the parts are purchased externally. Required: 2.1 In the next year, should Junior Company buy the part externally or make it internally
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