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please no handwriting and please write explanations no breif answers The South Water Company manufactures one of the parts that are used in the manufacture
please no handwriting and please write explanations no breif answers
The South Water Company manufactures one of the parts that are used in the manufacture of its final products, and its needs of this part amount to 7,500 units annually. The Accounts Department has determined the cost of manufacturing this part as follows:
A-Total expected costs to produce 7500 units
B-Expected cost per unit
direct material
A-45000
b-3
direct wages
A-7500
B-0.5
Variable additional costs
A-22500
B-1.5
Material handling and machinery setup costs
A-15000
B-1
Fixed additional costs
A-30000
B-2
Total
A-!!!
B-!!!
Note that there is an offer from an external supplier offering to supply this part to the company at a price of 10 dinars per unit.
Required: Analyze the previous data to answer the following questions:
1- Does the administration recommend manufacturing this part internally or buying it from abroad? Why?
2-What are the important factors when deciding to purchase from abroad? explain.
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