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Manufacturing overhead that were directly applicable to the production of TX3 were as follows: All of these costs would be eliminated if TX3 is purchased
Manufacturing overhead that were directly applicable to the production of TX3 were as follows: All of these costs would be eliminated if TX3 is purchased from outside supplier. The lowest purchase price for a unit of TX3 from an outside supplier is RM4.00. Transportation charges will be RM0.50 per unit and a purchasing clerk will have to be hired with a salary of RM8,500 per annum. If TX3 is purchased from an outside supplier, a major space in Department M will be free from usage. This excess space will be used to store Hibiz's finished products. Currently, Hibiz rents a storage space at approximately RM4,000 annually. Required: Determine whether Hibiz should make or buy component TX3. (17 marks)
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