The following information relates to component AHB2 manufactured by Aquarius Electronics. $$\begin{array} { l l r }
\text { Internal Manufacturing cost: } & \text { Direct materials } & \$ 30 \
\text { (per unit) } & \text { Direct labour } & 18 \
& \text { Variable manufacturing overhead } & 9 \
& \text { Fixed manufacturing overhead } & \underline { 17 } \
&& \underline { 74 } \
& \
\text { External acquisition price (per unit) } & & \$ 54
\end{array}$$ REQUIRED:
a)Based on the financial data presented, should Aquarius continue to manufacture the part or source it from the external supplier?
b)What other factors need to be taken into account?

Question

The following information relates to component AHB2 manufactured by Aquarius Electronics. $$\begin{array} { l l r } 
\text { Internal Manufacturing cost: } & \text { Direct materials } & \$ 30 \
\text { (per unit) } & \text { Direct labour } & 18 \
& \text { Variable manufacturing overhead } & 9 \
& \text { Fixed manufacturing overhead } & \underline { 17 } \
&& \underline { 74 } \
& \
\text { External acquisition price (per unit) } & & \$ 54
\end{array}$$ REQUIRED:
a)Based on the financial data presented, should Aquarius continue to manufacture the part or source it from the external supplier?
b)What other factors need to be taken into account?

Quizplus · Accepted Answer

The Answer of The following information relates to component AHB2 manufactured by Aquarius Electronics. $$\begin{array} { l l r } 
\text { Internal Manufacturing cost: } & \text { Direct materials } & \$ 30 \
\text { (per unit) } & \text { Direct labour } & 18 \
& \text { Variable manufacturing overhead } & 9 \
& \text { Fixed manufacturing overhead } & \underline { 17 } \
&& \underline { 74 } \
& \
\text { External acquisition price (per unit) } & & \$ 54
\end{array}$$ REQUIRED:
a)Based on the financial data presented, should Aquarius continue to manufacture the part or source it from the external supplier?
b)What other factors need to be taken into account?

The Following Information Relates to Component AHB2 Manufactured by Aquarius