Contribution (HL only) 1. Don Pak ean purchase equipment for in-house preduction for US5250,000 and produce the needed supplier that would natively the company can use an external component parts for USS10 each. Alt produce and ship these parts for USSIS each ‘Define the rerm contribution. emacs} bb Using make of buy analysis, calculate the number of component parts needed to each break-even, [2 mars] ¢ Comment on your answer to question 1b above. [amare] 2 Rachel Profte Pumps (RPP) can purchase the necessary capital equipment for in-house production for (000 and manufacture the pumps for $90 each. Alternatively, a local supplier can make the pump for $110 each, The sale forecast for RPP’ prosiuctis 2,500 units. The firm faces a make or buy decision Define the term make or buy decision. 2 mar bb Calculate the cost to make (CTM) and the cost to buy (CTB) for RPP, Comment on your findings. (4 mart PHOTOCOPYING PROHIBITED«¢_ Explain two factors that a busi 8, such as RPR, might need to consider in a make or buy analysis. fark] 3, Thetbleelow dows the cnt warble css ang pice fant (an) ma eri considering using a diferent supplier for its packaging forthe wrapping ofthe sweets. This option Meld reduce its packaging costs by 50%. Ee PRE aes Fed OSS Packaging cost per unit 020 ‘rer variable costs per unit 060 Seng pice per unt 110 ‘Distinguish berween fixed costs and variable cost. (8 mans supplier for (e mats) bb Using the data above, explain whether the sveer manufacturer should switch to diffe its packaging jon 3b, outline whether the sweet manufacturer should or should not use @ ‘¢ Based on your answer to questi ea diferent supplier fr its packaging PHOTOCOPYING PROHIBITED{68 _ Business Management Toolkit Workbook for the 18 Diploma 4 The table below shows the revenue and diect costs forthe four products (cost centres) ofa business. All figures are in US$k. The frm’ indirect costs are US$ 140,000, (EE Ee Sas 120 [150 0 % Direct costs 70 ED 50 6 Contin per oma Pr 2 Define the term cost centre amar) ' Complete the table above in onder to determine the contribution per product and the overall profit for the busines if uses contribution costing, (a mars) PHOTOCOPYING PROHIBITED14 Contribution (Ht only) _ 69 55 The table below shows the revenu nd costs forthe three profit centres ofa busines. ll igures ate in USK. of centes ‘sae revenue a Dect oss 130 Contibution ‘location of fed costs Profit per department a Complete the table above to determine the costing toallcate indirect costs equaly hascen he meh eee Bee eens bb Suppose the business decides to allocate the indirect costs hased on the proportion of sales revenue fr each profit centre. Complete the table below to show the allocation of fixed costs for each department the profi for each profit centre. lamar oft centres z Sales revenue 250 200 300 Direct costs 1375 130) 150. las | Contribution Proportion of sales 150 Allocation of fixed costs Proft per department J PHOTOCOPYING PROHIBITED70 _Business Management Toolkit Workbook for the 18 Diploma € With reference to your answer to question Sb above, explain the benefit forthe busines: of using absorption costing as business management tool (emacs PHOTOCOPYING PROHIBITED