Question 1

Cooking-Is-Easy Manufacturing (CIEM) produces and sells a successful line of kitchen appliances. Oneof the products is microwave oven. During the production meeting, Ainurina; managing directorexpressed her opinion; "We ought to stop making our own microwave oven and accept that outsidesupplier's offer. At the price RM180 per oven, we would be paying RM50 less than it costs tomanufacture in our factory." Cost data relating to production for last year, when30,000 units were manufactured are given below:

RM RM Direct Materials 103.50 Direct labour 60.00 Variable Overhead 15.00 Fixed Overhead: Supervision 7.50 Depreciation 16.00 General company overhead 28.00 51.50 Total cost per oven RM230.00