Question

Question 2-Make vs Buy 120 marks) When you completed your audit of the Surted Compay, managemere in deciding whether to cont part, which is named Faktron, company From your audit working popers and from further isvestipsion yos deveup the following data as being typical of the company's operstions wkal for your assistance ing a pat or to buy it fros an ouside supplier. The The annod requirement e Fasktros 500un T The lowest quotation from a supplier wa Faktrons have boen mnufactured in the precision machinery deparonenn. IT Fakmons are purchased from an outside supplier, cartain machinery will be sold and would nolize its net hook value. The following precisiso machingery departmers coets apply to the manufactueso Faon ssome或ofthe equipment ralfur Faktrns would reduce the dlo ain costs by the ámousts indicatal: depeeciaion $2,000,poperty taxes and isurancE, $1O The following additional precision machinery departmens costs would be incurred if Faktrons were purchaoed from an outside supplier right S.50 pet un and, indirect labour for receiving, materials handing, nd inspection $5,000 The cos of the purclusal Faktron Required s. Prepare a schedule comparing the total costs of the precision machinery depertinenet (1) when Faktrons are made, atd 12) when Faktrons are bought an outsider supplier. (15 marks) b, Discuss the QUANTITATIVE & QUALITATIVE coreiderations you would bring to the attention of managers in assisting them in deciding whether to make or bwy Faktror Include in you discussion consideratione that might be applied to the evalustion of the oatede supplier. (5 marks)

Answer 1

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