PH enterprises manufactures automobiles accessories and parts. Following are the information relating to the production of 3 lakh units. Direct Material cost 2400000rs Direct Labor cost 32,00,000rs Variable factory OH 20,00,000rs Fixed factory OH 20,00,000rs The purchase price of the component is Rs. 30. The fixed OH would continue to be incurred even when the component is brought from outside, although there would have been reduction in the cost to the extent of Rs. 10 lakh. Decide whether the parts should be made or bought under the current situation If the released capacity can be rented for Rs. 8 lakh

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter5: Process Costing
Section: Chapter Questions
Problem 1PA: The following product Costs are available for Haworth Company on the production of chairs: direct...
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PH enterprises manufactures automobiles accessories and parts. Following are the information
relating to the production of 3 lakh units.
Direct Material cost 2400000rs
Direct Labor cost 32,00,000rs
Variable factory OH 20,00,000rs
Fixed factory OH 20,00,000rs

The purchase price of the component is Rs. 30. The fixed OH would continue to be incurred even
when the component is brought from outside, although there would have been reduction in the
cost to the extent of Rs. 10 lakh. Decide whether the parts should be made or bought under
the current situation If the released capacity can be rented for Rs. 8 lakh

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