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Scenario B The company had two products Seat Covers and Floor Mats. Over the years Seat covers have been recording loses and the company is
Scenario B The company had two products Seat Covers and Floor Mats. Over the years Seat covers have been recording loses and the company is contemplating on dropping this loss making product. The following is a summary of profit statements for the two Required: Should the product be dropped or maintained? Advise the management. (10 marks) Scenario A Talbert Company produces a mechanical part used on of its engines. An outside supplier has offered to sell the part each year for P4.75. The company normally produces 100000 units of the part yearly. The activities associated with producing the part are listed below: If the company decides to buy from outside the following changes will be observed: Inspection costs will go done to P263000, Setting up cost will go done to P540 000, Moving materials will go done to P345 000 and Supervision costs will go done to P240 000 . REQUIRED: Advise the management on whether it should make or buy the product. (10 marks)
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