- Marche Ltd has been evaluating whether the company should continue manufacturing a component or buy it from an outside supplier. The cost per component was determined as follows: - Direct materials - Direct laboure -Variable manufacturing overhead -Fixed manufacturing overheade -Totale 154 40- 10 354 1004 - Marche Ltd uses 4,000 components per year. - Umbria plc submitted a bid to offer the same component at 80 per unit. Some managers in Marche Ltd thought it may be good for their company if they could reduce costs by buying from outside and discontinuing the production of the component. If the component is obtained from Umbria plc, Marche Ltd's unused production facilities could be leased to another company for 50,000 per year. Requiremente a) Determine the maximum amount per unit Marche Ltd should pay the outside supplier. 5 Marks b) Discuss, with relevant computations, whether Marche Ltd should make or buy the component. 9 Marks c) Assume that Marche Ltd could eliminate production supervisors with salaries totalling 30,000 if the component is purchased from Umbria plc. Should Marche Ltd make or buy the component in this case? Why? 11 Marks d) Discuss what relevant costs are and how they can be identified when taking a management decision. + 5 Marks