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A. Which of the components Pak Cables SAOG should make or buy? B. What are further considerations which should be considered if two of four components are sub contracted?

A. Which of the components Pak Cables SAOG should make or buy? B. What are further considerations which should be considered if two of four components are sub contracted?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Q.11) Pak Cables SAOG makes four components P, Q, R and S for which costs in the forthcoming year are expected to be as follows: Product (code name) Production (Units) Unit Margin Costs: Direct Materials Direct Labour Variable production overheads P R S 2,000 4,000 8,000 6,000 Omani Rial Omani Rial Omani Rial Omani Rial 08 10 04 08 16 18 08 12 04 06 02 04 28 34 14 24 Directly attributable fixed costs per annum and committed fixed costs: Incurred as direct consequence of making P Incurred as direct consequence of making Q Incurred as direct consequence of making R Incurred as direct consequence of making S Other fixed costs (committed) Omani Rial 2,000 10,000 12,000 16,000 60,000 100,000 Directly attributable fixed costs are all items of cash expenditures that are incurred as a direct the product in house. A sub contractor has offered to supply units of P, Q, R and S for Omani Rial 24, Omani Rial 42, Omani 28 respectively. Required: A. Which of the components Pak Cables SAOG should make or buy? B. What are further considerations which should be considered if consequence of making Rial 20 and Omani Rial two of four components are sub contracted?
Transcribed Image Text:Q.11) Pak Cables SAOG makes four components P, Q, R and S for which costs in the forthcoming year are expected to be as follows: Product (code name) Production (Units) Unit Margin Costs: Direct Materials Direct Labour Variable production overheads P R S 2,000 4,000 8,000 6,000 Omani Rial Omani Rial Omani Rial Omani Rial 08 10 04 08 16 18 08 12 04 06 02 04 28 34 14 24 Directly attributable fixed costs per annum and committed fixed costs: Incurred as direct consequence of making P Incurred as direct consequence of making Q Incurred as direct consequence of making R Incurred as direct consequence of making S Other fixed costs (committed) Omani Rial 2,000 10,000 12,000 16,000 60,000 100,000 Directly attributable fixed costs are all items of cash expenditures that are incurred as a direct the product in house. A sub contractor has offered to supply units of P, Q, R and S for Omani Rial 24, Omani Rial 42, Omani 28 respectively. Required: A. Which of the components Pak Cables SAOG should make or buy? B. What are further considerations which should be considered if consequence of making Rial 20 and Omani Rial two of four components are sub contracted?
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