Question 4 Garland limited makes four components. A, B, C, and D, for which costs in the forthcoming years expected to be as follows. Production (units) Unit marginal cost Direct materials Direct labour Variable production overhead A 1,000 RM 4 8 2 14 B 2,000 RM 5 9 3 17 Incurred as a direct consequences of making A Incurred as a direct consequences of making B Incurred as a direct consequences of making C Incurred as a direct consequences of making D Other common fixed cost Total C 4,000 RM 2 4 1 7 A total of RM50,000 fixed cost is expected to be incurred and the following shows the behavior of these fixed cost: RM D 3,000 RM 4 6 2 12 1,000 5,000 6,000 8,000 30,000 50,000 A sub-contractor has offered to supply A, B, C and D for RM12, RM21, RM10, and RM14 respectively. REQUIRED Decide whether Garland Ltd. should make or buy the components.

Question 4 Garland limited makes four components. A, B, C, and D, for which costs in the forthcoming years expected to be as follows. Production (units) Unit marginal cost Direct materials Direct labour Variable production overhead A 1,000 RM 4 8 2 14 B 2,000 RM 5 9 3 17 Incurred as a direct consequences of making A Incurred as a direct consequences of making B Incurred as a direct consequences of making C Incurred as a direct consequences of making D Other common fixed cost Total C 4,000 RM 2 4 1 7 A total of RM50,000 fixed cost is expected to be incurred and the following shows the behavior of these fixed cost: RM D 3,000 RM 4 6 2 12 1,000 5,000 6,000 8,000 30,000 50,000 A sub-contractor has offered to supply A, B, C and D for RM12, RM21, RM10, and RM14 respectively. REQUIRED Decide whether Garland Ltd. should make or buy the components.

Accounting (Text Only)

26th Edition

ISBN:9781285743615

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter21: Cost Behavior And Cost-volume-profit Analysis

Section: Chapter Questions

Problem 21.26EX: Items on variable costing income statement In the following equations, based on the variable costing...

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