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Page 1 of 15
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Page 2 of 15
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! Where the technical know-how is to be kept secret and not to be passed on to the suppliers and so
on.
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Page 10 of 15
 CD#1$,&MI*( >&&/*#! 19+1! +! 0%=%&%'(! '.! \#4+(&'! I'*3+(7! *+,#&! +(! #2#$14%$! $'*3'(#(1! .'4! %1&!
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Total cost Br.872, 000(
A small local company has offered to supply the components at a price of Br.7.80 each. If the division
discontinued the production of its components it would save two thirds of the supplies cost and Br.22, 000
of indirect labor cost. All other overhead costs would continue regardless of the decision made.!

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Page 11 of 15
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The company expects to operate at the same level of production and sales in the forth-coming year.
Consider all the available information, and assume that all costs incurred after split-off are variable.
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