Company B makes four components W, X, Y and Z for which costs in the forthcoming...

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Company B makes four components W, X, Y and Z for which costs in the forthcoming year are expected to be as follows: Production (units) Unit Marginal Costs: Direct Materials Direct Labour Variable Production Overheads W 1000 $ 4 8 2 14 X 2000 Incurred as a direct consequence of making W Incurred as a direct consequence of making X Incurred as a direct consequence of making Y Incurred as a direct consequence of making Z Other fixed costs (committed) 55931 $ Y 4000 S247 $ 17 7 Directly attributable fixed costs per annum and committed fixed costs: N Required: Should Company B make or buy the components? Please explain. 3000 $ 4 6 2 12 $ 1000 5000 6000 8000 30000 50000 A sub-contractor has offered to supply units of W, X, Y and Z for $12, $21, $10 and $14 respectively. Company B makes four components W, X, Y and Z for which costs in the forthcoming year are expected to be as follows: Production (units) Unit Marginal Costs: Direct Materials Direct Labour Variable Production Overheads W 1000 $ 4 8 2 14 X 2000 Incurred as a direct consequence of making W Incurred as a direct consequence of making X Incurred as a direct consequence of making Y Incurred as a direct consequence of making Z Other fixed costs (committed) 55931 $ Y 4000 S247 $ 17 7 Directly attributable fixed costs per annum and committed fixed costs: N Required: Should Company B make or buy the components? Please explain. 3000 $ 4 6 2 12 $ 1000 5000 6000 8000 30000 50000 A sub-contractor has offered to supply units of W, X, Y and Z for $12, $21, $10 and $14 respectively.

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