Question No. 4

Pioner limited makes four component A, B, C and D for which cost in the forthcoming year are expected to be as follows:

A B C D

Production (units) 22,000 16,000 26,000 18,000

Rupees per unit

Direct material 32 28 36 40

Direct labour 30 28 32 28

Variable Overhead 6 8 4 4

total 68 64 72 72

A sub-contractor has offered to supply units of A, B, C and D for Rs. 75, Rs. 71, Rs. 73 and Rs. 65 respectively.

Required:

Which product should buy or make