ABC Furniture manufactures tables. Recently a supplier has offered the tables of the same quality @ £14 each with an assurance of continued supply. The following is the budget for 4000 units prepared for the quarter ending 30 September 2021: £Materials 16,000Labour 25,000Overhead (production) Variable16,000 Fixed14,000Distribution Costs Variable6,000 Fixed7,500Admin Costs Variable5000 Fixed12500 A). Production capacity will not be used elsewhere if it was not employed in the manufacture of Tables (i.e., it is spare). How much would be the benefit/loss per unit, if the company decides to manufacture?

The decision to make or buy depends on the difference between cost incurred for both case.

Answered: ABC Furniture manufactures tables.…

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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ABC Furniture manufactures tables. Recently a supplier has offered the tables of the same quality @ £14 each with an assurance of continued supply. The following is the budget for 4000 units prepared for the quarter ending 30 September 2021:

		£
Materials		16,000
Labour		25,000
Overhead (production)
	Variable	16,000
	Fixed	14,000
Distribution Costs
	Variable	6,000
	Fixed	7,500
Admin Costs
	Variable	5000
	Fixed	12500

A). Production capacity will not be used elsewhere if it was not employed in the manufacture of Tables (i.e., it is spare). How much would be the benefit/loss per unit, if the company decides to manufacture?

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