QUESTION 3 (20 Marks) 3.1 REQUIRED

Study the information given below and answer the following questions:

3.1.1 Should Siyakha Limited make or buy the component? Support your answer withthe relevant calculations. (6)

3.1.2 State TWO (2) qualitative factors that Siyakha Limited should consider before making the decision to buy or make the component. (2)

INFORMATION

Siyakha Limited manufactures a component for one of its products. The cost per unit for the component is expected to be R70 for materials and R50 for direct labour. overheads are expected to be R100 per unit, 30% of which are variable.The manufacturing The company has sufficient capacity to manufacture 21 000 units of the component for 2020. An analysis revealed that the component can be purchased from an outside supplier at a cost of R200 per unit.

3.2 REQUIRED

Study the information provided below and answer the following questions:

3.2.1 Does Imbalito Limited have spare capacity to accept the special order?Motivate your answer. (2)

3.2.2 Should the company accept the special order? Show all the relevantcalculations. (6)

3.2.3 Explain TWO (2) possible disadvantages of accepting the special order. (4)

INFORMATION

Imbalito Limited expects to manufacture 36 000 units of Product K, using 90% of its normal capacity. The costs to manufacture 36 000 units of Product K are as follows:

	R
Fixed factory overheads	360 000
Variable factory overheads	75 600
Direct materials cost	259 200
Direct labour cost	201 600
Variable marketing costs	68 400
Fixed marketing and administrative costs	640 000

The selling price per unit is R40. However, a customer has offered to pay R24 per unit for an additional 3 800 units.