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Licra Company uses 1,000 units of a component for its production process. For the volume of 1,000 units the the costs to make one component
Licra Company uses 1,000 units of a component for its production process. For the volume of 1,000 units the the costs to make one component are: 12 22 Costs to make one component: Direct (Variable) Materials Direct (Variable) Labour Variable overhead costs Fixed costs Total costs 13 30 77 Licra has received a quote of 50 per unit from a potential supplier for 1.000 units of the component. If Licra buys 1.000 units of the component from the supplier, all costs will be eliminated apart from 60 percent of the fixed overhead costs that would continue. Given the scenario above, what should Licra do? A. Buy the component and save 27.000 B. Buy the component and save 3,000 C. Buy the component and save 9,000 D. Make the component and save 3,000
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