ASSIGNMENT TWO (25 Marks) Mazabuka Manufacturing company uses 10,000 units of part no 300 as a compo

 
   

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ASSIGNMENT TWO (25 Marks) Mazabuka Manufacturing company uses 10,000 units of part no 300 as a component to assemble on of its Crop Sprayers. It costs the company K18 per unit to produce it internally, computed as follows: 45,000 50,000 Direct Materials Direct Labour Variable Overheads Fixed Overhead Total Cost 40,000 45,000 180,000 An outside vendor has just offered to supply the part at K16 per unit. If the company stops to produce this part, one-third of the fixed overhead cost would be avoided. Required 1) Show calculations to determine whether Mazabuka Company should make or buy this part (15 Marks) 2) Explain why the concept of a process costing company and a job order costing company may be over taken by technology in the nearby future. (10 Marks).