90.2K

Verified Solution

Link Copied!

UESTION 4 (25 MARKS) i. Explain FOUR (4) types of cost need to be considered before proceed with decision making. (8 marks) ii. The management of Hibiz Sdn Bhd has asked for your assistance in deciding whether to continue manufacturing a component or to buy it from an outside supplier. The component called TX3 is used in producing Hibiz's finished products. An analysis of the accounting record and the production data revealed the following information for the year ending 31 December 2022: 1. Department M produced 35,000 units of TX3. 2. The workers in Department M worked full time totaling 6,000 hours per year to produce TX3. Each person was paid at RM12 per hour. 3. The cost of material for every unit of TX3 is RM2.20. 4. Manufacturing overhead that were directly applicable to the production of TX3 were as follows: All of these costs would be eliminated if TX3 is purchased from outside supplier. 5. The lowest purchase price for a unit of TX3 from an outside supplier is RM4.00. Transportation charges will be RM0.50 per unit and a purchasing clerk will have to be hired with a salary of RM8,500 per annum. 6. If TX3 is purchased from an outside supplier, a major space in Department M will be free from usage. This excess space will be used to store Hibiz's finished products. Currently, Hibiz rents a storage space at approximately RM4,000 annually

Answer & Explanation Solved by verified expert

See Answer