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