Cilin Ltd manufactures two products, the Qi and M. The Qi currently has a selling price of
Question:
Cilin Ltd manufactures two products, the Qi and M.
The Qi currently has a selling price of $20 per unit and it has a marginal cost of $15.
The Xi is selling well.
The economic climate has led to a decrease in the number of units of Qi sold. The financial manager of Alin Ltd believes that he must reduce the selling price of the product to $18 to match competitors' prices . He is also considering buying in the product at a cost of $12 each. Each unit would need to be completed at an extra cost of $3. Unfortunately, these products are of lower quality than the ones produced by Olin Ltd and, if purchased, over 40 per cent of the workforce would need to be made redundant.
Discuss whether Olin Ltd should make or buy in the product Qi.
Step by Step Answer:
Accounting For Cambridge International AS And A Level
ISBN: 9780198399711
1st Edition
Authors: Jacqueline Halls Bryan, Peter Hailstone