Tumekwisha Company is currently producing a small subassembly that is used in the production of one...

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Tumekwisha Company is currently producing a small subassembly that is used in the production of one of the company's main product lines. Tumekwisha Company's accounting department reports the following "costs" of producing the subassembly internally: Direct materials Direct labour Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Per Unit 8,000units Kshs. 6 4 1 3 2 # 5 21 48,000 32,000 8,000 24,000 16,000 40,000 168,000 Tumekwisha Company has just received an offer from an outside supplier who will provide 8000 subassemblies a year at a price of only Kshs. 19 each. Required: a) Advise Tumekwisha Company whether to stop producing the subassemblies internally and start purchasing them from the outside supplier. b) Outline at least four (4) qualitative factors to be considered before the decision in a) Tumekwisha Company is currently producing a small subassembly that is used in the production of one of the company's main product lines. Tumekwisha Company's accounting department reports the following "costs" of producing the subassembly internally: Direct materials Direct labour Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Per Unit 8,000units Kshs. 6 4 1 3 2 # 5 21 48,000 32,000 8,000 24,000 16,000 40,000 168,000 Tumekwisha Company has just received an offer from an outside supplier who will provide 8000 subassemblies a year at a price of only Kshs. 19 each. Required: a) Advise Tumekwisha Company whether to stop producing the subassemblies internally and start purchasing them from the outside supplier. b) Outline at least four (4) qualitative factors to be considered before the decision in a)

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The detailed answer for the above question is provided below a To advise Tumekwisha Company whether ... View the full answer