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Globaltronic Sdn Bhd has received a special marketing choice from one of the world's electronic suppliers. The suppliers want to sell to Globaltronic a certain

Globaltronic Sdn Bhd has received a special marketing choice from one of the world's electronic suppliers. The suppliers want to sell to Globaltronic a certain electronic component for RM19 per unit. Currently Globaltronic makes the part and its management is seriously considering the buying choice.

Unit manufactured 5,000

Direct materials RM36,000

cost Direct labor cost. RM48,000

Fixed costs RM20,000

Variable costs RM10,000

a) If Globaltronic buys the part, its fixed costs will reduce by 10% and the variable costs will be scrapped off. Perform incremental analysis and determine whether Globaltronic should buy the part or continue making the part?

b) If Globaltronic buys the part, its fixed costs will reduce by 90% and the variable costs will reduce by 95%. Perform incremental analysis and determine whether Globaltronic should buy the part or continue making the part?

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