Southwestern Company needs 1,000 motors in its manufacture of automobiles. It can buy the motors from Honda Motors for RM1,250 each. Southwesters plant can manufacture the motors for the following costs per unit:

RM

Direct materials 500

Direct manufacturing labor 250

Variable manufacturing overhead 200

Fixed manufacturing overhead _350

Total 1,300

If Southwestern buys the motors from Honda, 70% of the fixed manufacturing overhead applied will not be avoided.

Required :

1. Should the company make or buy the motors? Show your computation

ii. Describes TWO (2) qualitative factors that Southwestern should consider in deciding whether or not to make or buy the motors.