Product X - Contribution £40 and uses 20 scarce machine hours. Component Y - used in manufacture of X, has a variable cost of £5 and uses 3 machine hours. Component y can be bought for £10. In determining whether to make or buy what is the relevant cost of making:
A) £10
B) £6
C) £11
D) £40
Correct Answer:
Verified
Q1: Additup Ltd manufactures and markets pocket calculators
Q2: Q4: The analysis of constraints and decision making Q5: It is necessary to establish the contribution Q6: A firm at present manufacturers all Q7: For decisions where there are constraints the Q8: A firm manufacturers two products both of Q9: Differential costs are the differences between fixed Q10: A make or buy decision involves the Q11: All fixed costs are unavoidable.
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