00:01
All right here to determine the irrelevant cost in the decision to manufacture or purchase component a1, we need to identify the costs that do not affect the decision.
00:21
So first of all, what is given to you is variable manufacturing costs.
00:29
Variable manufacturing costs which is equal.
00:38
Equals to r315 ,000, i'm sorry, 315 ,000, yes, 315, yes, and fixed manufacturing costs, which is equal to r 1 ,000 ,000, yes, and then allocated overheads is equals to r 52 ,500, yes? so fixed manufacturing costs, so these costs are, if you talk about it, so these costs are relevant because they will decrease by 60 % if the component is not manufactured in -house...