Topic: Relevant Costing Magnus Tech Company manufactures a particular computer component. Currently, the costs per unit are
Get step-by-step solutions with AI-powered insights and expert guidance to help you understand core concepts.
Question:
Topic: Relevant Costing
Magnus Tech Company manufactures a particular computer component. Currently, the costs per unit are as follows:
Direct materials - P 50
Direct labor - P 500
Variable overhead - P 250
Fixed overhead - P 400.
Anish Inc. has obtained Magnus with an offer to sell 10,000 units of the component for P 1,100 per unit. If Magnus accepts the proposal, P 2,500,000 of the fixed overhead will be eliminated. Should Magnus make or buy the component?
a. Make due to savings of P 3,000,000
b. Buy due to savings of P 2,500,000
c. Buy due to savings of P 1,000,000
d. Make due to savings of P 500,000
Show solution
Posted Date: