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most favourable alternative? By how much in total? P9-13...

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Accounting

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most favourable alternative? By how much in total? P9-13 MAKE OR BUY Assume that a division of Sony Inc. makes an electronic com speakers. Its manufacturing process for the component is a highly automated part of a just- time production system. All abour is considered to be an overhead cost, and all overhed regarded as fixed with respect to output volume. Production costs for 100,000 units of t component for i component are Direct materials Factory overhead Indirect labour Supplies Allocated S300,000 80,000 30,000 40,000 150,000 S450,000 occupancy cost Total cost A small local company has offered to supply the components at a price of $3.45 ead the division discontinued its production of the component, it would save two-thirds of br supplies cost and $30,000 of indirect labour cost. All other overhead costs would contni The division manager recently attended a seminar on cost behaviour and learned Bix fixed and variable costs, Hle wants to continue to make the component because 1. Compute the relevant costs of (a) making and (b) purchasing the componentWich . What qualitative factors might influence the decision about whether to make the vatiab native is less costly and by how much? component

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