Page 11 - PowerPoint Presentation
P. 11
DECISION MAKING
Make / Buy Decision - Example
Company A produces a component used in the production of one of the
company's main products. The costs to make 10 000 units are budgeted
as follows:
Material R30 000
Labour R80 000
Variable overhead R60 000
Depreciation R30 000
Allocated general overhead R80 000
R280 000
The components can be purchased from an outside supplier at a cost of
R20 per unit.
Determine whether company should make or buy the component?
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