Q.11) Pak Cables SAOG makes four components P, Q, R and S forwhich costs in the forthcoming yearare expected to be asfollows:Product (code name)Production (Units)Unit Margin Costs:Direct MaterialsDirect LabourVariable production overheadsPRS2,0004,0008,0006,000Omani Rial Omani Rial Omani Rial Omani Rial08100408161808120406020428341424Directly attributable fixed costs per annum and committedfixed costs:Incurred as direct consequence of making PIncurred as direct consequence of making QIncurred as direct consequence of making RIncurred as direct consequence of making SOther fixed costs (committed)Omani Rial2,00010,00012,00016,00060,000100,000Directly attributable fixed costs are all items of cashexpenditures that are incurred as a directthe product in house.A sub contractor has offered to supply units of P, Q, R and S forOmani Rial 24, Omani Rial 42, Omani28 respectively.Required:A. Which of the components Pak Cables SAOG should make orbuy?B. What are further considerations which should be considered ifconsequence of makingRial 20 and Omani Rialtwooffourcomponentsaresubcontracted?

The make-or-buy decision is related to making a decision on whether to manufacture a product…

Answered: A. Which of the components Pak Cables…

A. Which of the components Pak Cables SAOG should make or buy? B. What are further considerations which should be considered if two of four components are sub contracted?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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