Question
ToozeTooze Limited manufactures air conditioning units. It needs Component A for one of its products, and can either manufacture them internally for variable costs of
ToozeTooze
Limited manufactures air conditioning units. It needs Component A for one of its products, and can either manufacture them internally for variable costs of
£281281
each, or buy them in completed for
£337337
each.
Required:
1. Should
ToozeTooze
Limited manufacture or buy in Component A, assuming
ToozeTooze
Limited has spare manufacturing capacity?2. If
ToozeTooze
Limited did not have spare manufacturing capacity, but could only manufacture Component A by reducing output of Component B (each one of which currently contributes
£7676),
should
ToozeTooze
Limited manufacture or buy Component A?
(Enter your answers as integers.)
Requirement 1
Variable costs to manufacture Component A are
▼
greater than
less than
the cost of buying in completed Component As by
£nothing.
ToozeTooze
Limited should therefore
▼
manufacture the component
buy in the component
.
Requirement 2
If
ToozeTooze
Limited did not have spare capacity, the relevant cost of each Component A would be:
|
The relevant costs of manufacturing Component A are
▼
greater than
less than
the cost of buying in completed Component As by
£nothing.
ToozeTooze
Limited should therefore
▼
manufacture the component
buy in the component
.
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