wrong =5 down votes don't copy from book solution I need just diff

As the worthwhile to give leisure centre for lease ore Illustration 42. (Relevant Cost) Chakra Ltd. manufactures Mixer Grinders. The manufacture involves an assembly of various parts which proceeds in the machine shop and purchased components. The on/off switch is presently being purchased form a vendor at * 4.50 each, annual requirement being 20,000 pieces. The production manager has put up a proposal two months back to make the switch in the machine shop He had suggested that the company would make profit and save taxes on bought out switch. The costing department was asked to make an estimate of making the item which showed that the cost of making was 7473 The purchase department continues buying the item on the basis of the cost estimate given to them. Recently the Vendor has sent a letter requesting the purchase department to grant increase in price of 10% minimum pe switch as the input costs had gone up. The costing department was once again requested to estimate cost of making the switch. The costing department re-estimated the costs using current prices and observed that the cost of making hos gone up to 5.33. Purchase department again decided to continue buying as it was cheaper to buy than make The cost estimate prepared by the costing department was as under: Annual costs Previous () Current () 40,000 48,000 20,000 22,000 Direct Materials Direct Labour *2 per hour Overheads at 3 per hour 30.000 31,500 Total cost at current price 90,000 1,01,500 Add: expected increase 5% 4,500 5,075 Expected manufacturing cost 94,500 1,06.575 Cost per price 4.73 5.33 Twenty-five per cent of the overheads are fixed. 3 Required: Do you agree with the decision of buying considering the relevant costs? If the cost of making or buying is more or less same, what factors other than cost will influence making decision? 20 A local Government authority owns and operates a leisure centre with numerous sporting accommodation, a cafeteria and a sports shop. The summer season lasts for 20 weeks including a peak period of 6 weeks corresponding to the school holidays. The following budgets have been prepared for the next summer season: Accommodation: 60 single rooms let on a daily basis. 35 double rooms let on a daily basis at 160% of the single room rate. aning inding Room rate: Fixed costs 29,900 Variable costs = 4 per single room per day and 26.40 per double room per day 6.900 Sports centre: 1.250 Residential guests each pay 2 per day and casual visitors 3 per day for the use of facilities. Fixed costs 15.500. Sports Shop 3 9001 Estimated contribution 31 per person per day. Fixed costs 8,250. 705 Cafeteria: Estimated contribution 1.50 per person per day. Fixed costs 12.750. During the summer season the centre is open7 day a week and the Following activity levels are anticipated. Double rooms fully booked for the whole season. Single rooms fully booked for the peak period but at only 80% of Capacity during the rest of the season. 30 casual visitors per day on average. You are required to: la) Calculate the charges for single and double rooms assuming that the authority wishes to make a 10.000 profit on accommodation. (b) Calculate the anticipated total profit for the leisure centre as a whole for the season. (c) Advise the authority whether an offer of 32,50,000 form a private leisure company to operate the centre for five years is worth while, assuming that the authority uses a 10% cost of capital and operations continue as outlined above