An automotive components producer can buy car heaters from an outside supplier for Rs.165 per unit.
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An automotive components producer can buy car heaters from an outside supplier for Rs.165 per unit. In considering whether to make these internally, the company calculates that an equivalent unit can be made in 2 labourhours using Rs.100 worth of materials.?Labor is currently at full capacity producing carburetors which generate contribution of Rs.90. A carburetor takes 3 hours to produce. Labor costs Rs.6 per hour. The carburetor also absorbs fixed overhead costs at the rate of Rs.20 per labourhour.?Should the company make or buy the heaters?
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