Omega Corporation currently manufactures a component for its main product. The costs per unit are as follows: Sh. Direct materials 1.00 Direct labor 10.00 Variable overhead 5.00 Fixed overhead 8.00 Total 24.00 Zed Company has contacted Omega Company with an offer to sell them 5,000 of the components for sh. 22 each. Omega Company will eliminate sh. 25,000 of the fixed overhead if it accepts the order. should Omega company make or buy the component:
Omega Corporation currently manufactures a component for its main product. The costs per unit are as follows:
Sh.
Direct materials 1.00
Direct labor 10.00
Variable
Fixed overhead 8.00
Total 24.00
Zed Company has contacted Omega Company with an offer to sell them 5,000 of the components for sh. 22 each. Omega Company will eliminate sh. 25,000 of the fixed overhead if it accepts the order.
should Omega company make or buy the component:
.
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