Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Luboh Pty Ltd has been manufacturing a housings which is a shell box for its gaming computer parts to fit in. The unit costs of

image text in transcribed

Luboh Pty Ltd has been manufacturing a housings which is a shell box for its gaming computer parts to fit in. The unit costs of the box alone are as follows: Direct materials $ 5.00 Direct labour $ 24.00 Variable overhead $ 16.00 Fixed overhead $ 22.00 $ 67.00 Techo Pty Ltd has contacted Luboh with an offer to sell it 5,000 housing box for $50.00 each. Required a. Should Luboh make or buy the housing box based purely on financial considerations? Show full calculations. b. The accountant decided to investigate the fixed costs to see whether any incremental changes would occur if the housing boxes were no longer manufactured. The accountant believes that Luboh Pty Ltd will eliminate $50,000 of fixed overhead if it accepts the proposal. Does this new information change the decision? Show your calculations. What qualitative factors are important for Luboh to make or buy decision? C

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Literacy For Managers

Authors: Richard A. Lambert

1st Edition

1613630182, 978-1613630181

More Books

Students also viewed these Finance questions