A lap-top manufacturing company finds that it costs to the make one component, the same is available in the market at Rs. 50 each, with assurance of uninterrupted supply.

The breakdown of cost is as follows:

Materials

20.00 each

Labour

17.50 each

Variable overheads

7.50 each

45.00

Depreciation and other fixed cost

15.00 each

60.00 each

You are required to decide:

  1. Whether the company should make or buy the component.
  2. If another vendor from the outside would offer the component at Rs. 44.00 each?