Lingkod Company, a manufacturer of furniture sets, is considering to purchase the seat cushions needed for its chairs. The expected purchase price of these seat cushions is P50 per unit. Lingkod has been making its own seat cushions since it started operating. If it would continue to produce these cushions, the company expects to incur the ff costs: Raw materials - P13, Direct labor-P15, variable OH-P5 and Fixed OH (based on the average production requirement of 10,000 units)-P20. Should the company continue to make the seat cushion or buy from outside supplier?
Lingkod Company, a manufacturer of furniture sets, is considering to purchase the seat cushions needed for its chairs. The expected purchase price of these seat cushions is P50 per unit. Lingkod has been making its own seat cushions since it started operating. If it would continue to produce these cushions, the company expects to incur the ff costs: Raw materials - P13, Direct labor-P15, variable OH-P5 and Fixed OH (based on the average production requirement of 10,000 units)-P20. Should the company continue to make the seat cushion or buy from outside supplier?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Lingkod Company, a manufacturer of furniture sets, is considering to purchase the seat cushions needed
for its chairs. The expected purchase price of these seat cushions is P50 per unit.
Lingkod has been making its own seat cushions since it started operating. If it would continue to produce
these cushions, the company expects to incur the ff costs: Raw materials - P13, Direct labor-P15, variable
OH-P5 and Fixed OH (based on the average production requirement of 10,000 units)-P20.
Should the company continue to make the seat cushion or buy from outside supplier?
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