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
Managerial Accounting An Integrative Approach
ISBN: 9780999500491
2nd Edition
Authors: C J Mcnair Connoly, Kenneth Merchant
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