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QUESTION 2 (25 MARKS) For several years, CC Corporation has purchased the carafe assembly of its major coffeemaker line at an annual cost of RM 11 million. The suggestion to make the component in-house has been made. For the three departments involved, the annual indirect cost rates, estimated material, labor and hours are found in Table Q2. The allocated hours column is the time necessary to produce the carafes for a year. Equipment must be purchased with the following estimates: first cost of RM 10 million, salvage value of RM 250,000, and life of 10 years. Perform an economic analysis for the make alternative, assuming that a market rate of 15% per year is the MARR (25 Marks) CONFIDENTIAL BFF/1617ILBFF1922 Table Q2. Production cost estimates INDIRECT COSTS DEPARTMENT Basis, Rate per Allocated Material Direct Costs, S Labor Hours Hours, S Hours Cost, S 25,000 25,000 10,000 200,000 200,000 50,000 200,000 50,000 100,000 Labor10 Machine5 Labor15

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