You are given the following data relating to bought-out prices and the cost of production of undernoted items. Prepare a suitable statement showing which items should be purchased from outside giving ranks in order of preference for buying, assuming (a) there is no constraint or key factor; (b) machine hours is a key factor; and (c) labour hours is a key factor.
|
Item A |
Item 8 |
Item C |
|
|
Purchase price per unit |
30 |
40 |
50 |
|
Variable cost per unit |
18 |
48 |
34 |
|
Fixed cost per unit |
6 |
10 |
14 |
|
Production per machine hour |
1 |
2 |
1.50 |
|
Labour hours required per unit |
2 |
1 |
4 |