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Question 4: Make or Buy Albax Ltd manufactures three components (A, B and C) All the components are manufactured using the same general purpose machinery.
Question 4: Make or Buy Albax Ltd manufactures three components (A, B and C) All the components are manufactured using the same general purpose machinery. The following production cost data are available, together with the purchase prices from an outside supplier. A B Production cost: GH GH GH Direct material 14 20 10 Direct labour 24 13 12 Variable overhead 8 7 8 Allocated fixed overhead 2 6 4 Total 55 46 34 Purchase price from outside supplier 54 50 28 Required: a. Which components should be purchased from outside supplier? b. If machine hours per unit of A, B and C are 2, 5 and 4 respectively and manufacturing requirements show a need of 1,500 units of each component per week and maximum number of general purpose machinery hours available per week is 15,000, what should be purchased from outside supplier
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