Question: With reference to information given at Table 1 and the footnotes to the table, make an informed economic decision on whether KIND Pty Ltd should
With reference to information given at Table 1 and the footnotes to the table, make an informed economic decision on whether KIND Pty Ltd should make the component or buy it from the market.
| MAKE (per unit) | BUY (per unit) | MAKE (Total) | BUY (Total) | |
| PURCHASE PRICE | $ 29 | $174 000 | ||
| DIRECT MATERIAL | $ 10 | $ 60 000 | ||
| DIRECT LABOUR | 8 | 48 000 | ||
| VARIABLE OVERHEAD | 9 | 54 000 | ||
| FIXED OVERHEAD | 3 | 18 000 | ||
| TOTAL RELEVANT COST | $30 | $29 | $180 000 | $174 000 |
| DIFFERENCE IN FAVOUR OF BUYING | $1 | $ 6000 |
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