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CIMA Exam CIMAPRO19-P02-1 Topic 3 Question 81 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam
Question #: 81
Topic #: 3
[All CIMAPRO19-P02-1 Questions]

Endure Co. makes 1,000 units ofX and 2,000 units of Y.

Costs for X: Material $4, labour $8, direct overhead $2, fixed cost $4.

Costs for Y: Material $9, labour $9, direct overhead $4, fixed cost $6.

Selling price for X and Y are S19 and $25 respectively. Another company can sell ready made product X and product Y's to Endure Co, this company sells X at $12 and Y at $21. Advise Endure Co. on what would be the

most cost effective way to source products X and Y.

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Suggested Answer: A

by Dulce at Feb 10, 2024, 04:33 AM

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Kati
5 months ago
Hmm, I see your point. It might be worth it for Endure Co. to invest in producing both X and Y themselves then.
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Glendora
6 months ago
I agree with Nickie, it's important to consider the long-term benefits of producing both products in-house.
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Nickie
6 months ago
That's true, but if Endure Co. produces both X and Y, they can control the quality and have better profit margins.
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Kati
6 months ago
But wouldn't it be cheaper to buy X from the other supplier since they sell it at $12?
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Nickie
6 months ago
I think it would be most cost effective for Endure Co. to produce both X and Y themselves.
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