Shim Ramyun Company produces the well-known spicy ramen since 2012. The company is currently operating at...

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Shim Ramyun Company produces the well-known spicy ramen since 2012. The company is currently operating at 100% plant capacity. Below are the information about the production of the ramen packaging: • Variable manufacturing overhead is charged to the production at the rate of 20% direct labor cost. The direct materials and direct labor cost per unit to make packaging are RM0.05 and. RM0.70, respectively. ● Normal production is 60,000,000 of ramen every year. . Samyung, a supplier offers to produce the ramen packaging at a price of RM0.80 per unit. If Shim Ramyun Company accepts the offer, all variable manufacturing costs will be eliminated, but the RM600,600 of fixed manufacturing overhead currently being charged to the ramen packaging will have to be absorbed by other products. The business owner is in doubt whether they should buy or make the ramen packaging themselves. Required (a) Prepare the incremental analysis for the decision to make or buy the ramen packaging. Shim Ramyun Company produces the well-known spicy ramen since 2012. The company is currently operating at 100% plant capacity. Below are the information about the production of the ramen packaging: • Variable manufacturing overhead is charged to the production at the rate of 20% direct labor cost. The direct materials and direct labor cost per unit to make packaging are RM0.05 and. RM0.70, respectively. ● Normal production is 60,000,000 of ramen every year. . Samyung, a supplier offers to produce the ramen packaging at a price of RM0.80 per unit. If Shim Ramyun Company accepts the offer, all variable manufacturing costs will be eliminated, but the RM600,600 of fixed manufacturing overhead currently being charged to the ramen packaging will have to be absorbed by other products. The business owner is in doubt whether they should buy or make the ramen packaging themselves. Required (a) Prepare the incremental analysis for the decision to make or buy the ramen packaging.

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To make a decision on whether to make or buy the ramen packaging we need to analyze the incremental ... View the full answer