The Following Information Relates to Component AHB2 Manufactured by Aquarius

question 64

Essay

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?

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Definitions:

Inelastic Demand

A situation where the quantity demanded of a good or service changes minimally in response to price changes.

Total Revenue

The total amount of money received by a company for goods sold or services provided during a certain period of time.

Taxi Demand

Refers to the consumer need for taxi services, which can vary based on factors like time, location, and price.

Regulated Fares

Fares for transportation or services that are controlled or set by a governing body to ensure fairness and accessibility.