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Cinta Berhad is a company that produces children body lotion for domestic and overseas market. One of its products is Comel that is sold to wholesalers in a tube, with a price of RM8 per box of 24 tubes. The company manufactures 100,000 boxes of Comel every year and there is a fixed cost of RM90,000 charge to the manufacturing overhead annually. manufacturing cost per box of product Comel including the cost of the tube is as follows: The RM 3.60 Direct materials Direct labour 2.00 Manufacturing overhead Total unit cost 1.40 7.00 As an alternative to making the tube internally, Cinta Berhad can purchase the empty tubes from an outside supplier at a price of RM1.35 per box of 24 tubes. If Cinta Berhad accept the purchase proposal, the direct labour and variable manufacturing overhead costs per box would be reduced by 10% and the direct materials would be reduced by 25%. In view of this, the Marketing Manager suggested the company to buy the tubes of Comel from the outside supplier. Required: Advise Cinta Berhad on whether the tubes of Comel should be purchased from outside supplier. Prepare the relevant analysis to support your decision. a. b. Instead of sales of 100,000 boxes of Comel, a revised sales order shows an estimation of sales volume of 120,000 boxes. However, additional equipment must be acquired to manufacture the tubes at an annual rental of RM40,000. Advise the management of Cinta Berhad on whether to make or buy the tubes of Comel. Prepare the relevant analysis to support your decision. Briefly explain FOUR (4) qualitative factors that should Cinta Berhad consider in making decision whether they should make or buy the tubes. C.

Cinta Berhad is a company that produces children body lotion for domestic and overseas market. One of its products is Comel that is sold to wholesalers in a tube, with a price of RM8 per box of 24 tubes. The company manufactures 100,000 boxes of Comel every year and there is a fixed cost of RM90,000 charge to the manufacturing overhead annually. manufacturing cost per box of product Comel including the cost of the tube is as follows: The RM 3.60 Direct materials Direct labour 2.00 Manufacturing overhead Total unit cost 1.40 7.00 As an alternative to making the tube internally, Cinta Berhad can purchase the empty tubes from an outside supplier at a price of RM1.35 per box of 24 tubes. If Cinta Berhad accept the purchase proposal, the direct labour and variable manufacturing overhead costs per box would be reduced by 10% and the direct materials would be reduced by 25%. In view of this, the Marketing Manager suggested the company to buy the tubes of Comel from the outside supplier. Required: Advise Cinta Berhad on whether the tubes of Comel should be purchased from outside supplier. Prepare the relevant analysis to support your decision. a. b. Instead of sales of 100,000 boxes of Comel, a revised sales order shows an estimation of sales volume of 120,000 boxes. However, additional equipment must be acquired to manufacture the tubes at an annual rental of RM40,000. Advise the management of Cinta Berhad on whether to make or buy the tubes of Comel. Prepare the relevant analysis to support your decision. Briefly explain FOUR (4) qualitative factors that should Cinta Berhad consider in making decision whether they should make or buy the tubes. C.

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 7PB: Remarkable Enterprises requires four units of part A for every unit of Al that it produces....
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Cinta Berhad is a company that produces children body lotion for domestic and overseas market. One of its products is Comel that is sold to wholesalers in a tube, with a price of RM8 per box of 24 tubes. The company manufactures 100,000 boxes of Comel every year and there is a fixed cost of RM90,000 charge to the manufacturing overhead annually. manufacturing cost per box of product Comel including the cost of the tube is as follows: The RM 3.60 Direct materials Direct labour 2.00 Manufacturing overhead Total unit cost 1.40 7.00 As an alternative to making the tube internally, Cinta Berhad can purchase the empty tubes from an outside supplier at a price of RM1.35 per box of 24 tubes. If Cinta Berhad accept the purchase proposal, the direct labour and variable manufacturing overhead costs per box would be reduced by 10% and the direct materials would be reduced by 25%. In view of this, the Marketing Manager suggested the company to buy the tubes of Comel from the outside supplier. Required: Advise Cinta Berhad on whether the tubes of Comel should be purchased from outside supplier. Prepare the relevant analysis to support your decision. а. b. Instead of sales of 100,000 boxes of Comel, a revised sales order shows an estimation of sales volume of 120,000 boxes. However, additional equipment must be acquired to manufacture the tubes at an annual rental of RM40,000. Advise the management of Cinta Berhad on whether to make or buy the tubes of Comel. Prepare the relevant analysis to support your decision. Briefly explain FOUR (4) qualitative factors that should Cinta Berhad consider in making decision whether they should make or buy the tubes. С.
Transcribed Image Text:Cinta Berhad is a company that produces children body lotion for domestic and overseas market. One of its products is Comel that is sold to wholesalers in a tube, with a price of RM8 per box of 24 tubes. The company manufactures 100,000 boxes of Comel every year and there is a fixed cost of RM90,000 charge to the manufacturing overhead annually. manufacturing cost per box of product Comel including the cost of the tube is as follows: The RM 3.60 Direct materials Direct labour 2.00 Manufacturing overhead Total unit cost 1.40 7.00 As an alternative to making the tube internally, Cinta Berhad can purchase the empty tubes from an outside supplier at a price of RM1.35 per box of 24 tubes. If Cinta Berhad accept the purchase proposal, the direct labour and variable manufacturing overhead costs per box would be reduced by 10% and the direct materials would be reduced by 25%. In view of this, the Marketing Manager suggested the company to buy the tubes of Comel from the outside supplier. Required: Advise Cinta Berhad on whether the tubes of Comel should be purchased from outside supplier. Prepare the relevant analysis to support your decision. а. b. Instead of sales of 100,000 boxes of Comel, a revised sales order shows an estimation of sales volume of 120,000 boxes. However, additional equipment must be acquired to manufacture the tubes at an annual rental of RM40,000. Advise the management of Cinta Berhad on whether to make or buy the tubes of Comel. Prepare the relevant analysis to support your decision. Briefly explain FOUR (4) qualitative factors that should Cinta Berhad consider in making decision whether they should make or buy the tubes. С.
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