3. A radio manufacturing company finds that, while it costs 6.25 to make component D-420, the...

 

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3. A radio manufacturing company finds that, while it costs 6.25 to make component D-420, the same is available in the market at 5.75 each, with an assurance of continued supply. The break-down of the cost is: Materials Labour Other Variables 2.75 each 1.75 each 0.50 each 1.25 each 6.25 Depreciation and other fixed costs Total a) Should you make or buy? b) What would be your decision, if the supplier offered the component at * 4.85 each? 3. A radio manufacturing company finds that, while it costs 6.25 to make component D-420, the same is available in the market at 5.75 each, with an assurance of continued supply. The break-down of the cost is: Materials Labour Other Variables 2.75 each 1.75 each 0.50 each 1.25 each 6.25 Depreciation and other fixed costs Total a) Should you make or buy? b) What would be your decision, if the supplier offered the component at * 4.85 each?