Tudor Associates currently makes its own parts for the microwaves it sells. It has recently been approached

Question:

Tudor Associates currently makes its own parts for the microwaves it sells. It has recently been approached by a local machine shop that has offered to make the outer casing of the microwaves. The current cost to make the casing is $20, which consists of $12 in materials, $4 in labor, and $4 in overhead. The price offered by the local machine shop is $15. If Tudor takes the offer, it can eliminate  its current materials and labor but only $1 of the overhead.


REQUIRED: 

a. Analyze the current situation (“as is” is to make) vs. the offer from the local machine shop.

b. What should Tudor do? Why?

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Related Book For  book-img-for-question

Managerial Accounting An Integrative Approach

ISBN: 9780999500491

2nd Edition

Authors: C J Mcnair Connoly, Kenneth Merchant

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