A business makes two components which it uses to produce one of its products. Details are: Component A Component B Per unit information: S S Buy in price 14 17 Material 2 5 Labour 4 6 Variable overheads 6 7 General fixed overheads 4 3 Total absorption cost 16 21 The business wishes to maximise contribution and is considering whether to continue making the components internally or buy in from outside. Which components should the company buy in from outside in order to maximise its contribution? A. A only B. B only C. Both A and B D. Neither A nor B

A business makes two components which it uses to produce one of its products. Details are: Component A Component B Per unit information: S S Buy in price 14 17 Material 2 5 Labour 4 6 Variable overheads 6 7 General fixed overheads 4 3 Total absorption cost 16 21 The business wishes to maximise contribution and is considering whether to continue making the components internally or buy in from outside. Which components should the company buy in from outside in order to maximise its contribution? A. A only B. B only C. Both A and B D. Neither A nor B

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter21: Variable Costing For Management analysis

Section: Chapter Questions

Problem 5DQ: The manager of a company are planning to manufacture more product than is needed for expected sales...

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