unaprer 4 Measuring relevant costs and revenues for decision-making Question 4.24 Make or buy decision The management of Springer plc is considering next year's production and purchase budgets. One of the components produced by the company, which is incorporated into another product before being sold, has a budgeted manufacturing cost as follows: L._)_ Direct material 14 Direct labour [4 hours at 10 per hour) 40 Variable overhead (4 hours at 2 per hour] 8 Fixed overhead [4 hours at 5 per hour) E Total cost iper unit Trigger plc has offered to supply the above component at a guaranteed price of ?8 per unit. Required: (a) Considering cost criteria only, advise management whether the above component should be purchased from Trigger plc. Any calculations should be shown and assumptions made, or aspects which may require further investigation should be clearly stated. {6 marks]