Kraken Limited needs two new machines, machine X and machine Y. You are provided with the following information: Cost to purchase Cost to produce in-house: Labour Materials (to be purchases) Variable Overheads Fixed Overhead Machine X Machine Y 50,000 40,000 10,000 16,000 22,000 19,000 12,000 14,000 20,000 7,000 The labour cost relates to the salaries of the company's engineers who will be employed whether or not these machines are purchased or made in-house. However due to a fall in demand in recent months, if not working on these projects these workers would be idle. Which is the best option, on a cost basis, for Kraken Limited: Purchase Machine Y and make Machine X Purchase Machine X and make Machine Y Purchase both machines O Make both machines in-house

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter5: Process Costing
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Kraken Limited needs two new machines, machine X and machine Y. You are provided with the
following information:
Cost to purchase
Cost to produce in-house:
Labour
Materials (to be purchases)
Variable Overheads
Fixed Overhead
Machine X
Machine Y
50,000
40,000
10,000
16,000
22,000
19,000
12,000
14,000
20,000
7,000
The labour cost relates to the salaries of the company's engineers who will be
employed whether or not these machines are purchased or made in-house.
However due to a fall in demand in recent months, if not working on these projects
these workers would be idle.
Which is the best option, on a cost basis, for Kraken Limited:
Purchase Machine Y and make Machine X
Purchase Machine X and make Machine Y
Purchase both machines
O Make both machines in-house
Transcribed Image Text:Kraken Limited needs two new machines, machine X and machine Y. You are provided with the following information: Cost to purchase Cost to produce in-house: Labour Materials (to be purchases) Variable Overheads Fixed Overhead Machine X Machine Y 50,000 40,000 10,000 16,000 22,000 19,000 12,000 14,000 20,000 7,000 The labour cost relates to the salaries of the company's engineers who will be employed whether or not these machines are purchased or made in-house. However due to a fall in demand in recent months, if not working on these projects these workers would be idle. Which is the best option, on a cost basis, for Kraken Limited: Purchase Machine Y and make Machine X Purchase Machine X and make Machine Y Purchase both machines O Make both machines in-house
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