Mostera manufactures two components A & B. There are to be 5000 of each component manufactured next year. The following information is available for each unit of A&B. Machine Hrs Variable Cost Unit of A 4 25 Unit of B 6 34 A total of 30,000 machine hours are available. A sub-contractor is willing to supply Monstera with units of A & B for P27 and P38 respectively. Advise Monstera whether to make or buy.

Mostera manufactures two components A & B. There are to be 5000 of each component manufactured next year. The following information is available for each unit of A&B. Machine Hrs Variable Cost Unit of A 4 25 Unit of B 6 34 A total of 30,000 machine hours are available. A sub-contractor is willing to supply Monstera with units of A & B for P27 and P38 respectively. Advise Monstera whether to make or buy.

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Description: Mostera manufactures two components A & B. There are to be 5000 of each component manufactured next year. The following information is available for each unit of A&B. Machine Hrs Variable CostUnit of

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 6PA: Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A...

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Concept explainers

Process Costing

Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure. 

Job Costing

Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.

ABC Costing

Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.

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Mostera manufactures two components A & B. There are to be 5000 of each component manufactured next year. The following information is available for each unit of A&B.

Machine Hrs Variable Cost
Unit of A 4 25
Unit of B 6 34

A total of 30,000 machine hours are available.
A sub-contractor is willing to supply Monstera with units of A & B for P27 and P38 respectively.

Advise Monstera whether to make or buy.

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