Question: following are the total processing costs for each unit. Direct material cost Direct labour cost Variable factoty overhead Tsh 6,000 Fixed cost s automobile accessories
following are the total processing costs for each unit. Direct material cost Direct labour cost Variable factoty overhead Tsh 6,000 Fixed cost s automobile accessories and parts. The Tsh 5,000 Tsh 8,000 Tsh, 56,000 The same units are available in the local market. The purchase price f the component is Tsh. 22,000 per unit. The fixed overhead would continue to be incurred even when the component is bought from outside, although there would be reduction to the extent of Tsh. 2,000 per unit. However, this reduction does not occur, if the machinery is rented out. Required: (A) Should the part be made or bought, considering that the present capacity when released would remain idie? (B) In case, the released capacity can be rented out to another manufacturer for Tsh. 4,500 per unit, what should be the decision
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