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6. The management of Furman Industries has been evaluating whether the company should continue manufacturing a component or buy it from an outside supplier. A
6. The management of Furman Industries has been evaluating whether the company should continue manufacturing a component or buy it from an outside supplier. A $100 cost per component was determined as follows: Direct material $ 15 Direct labor 40 Variable manufacturing overhead 10 Fixed manufacturing overhead 35 $100 Furman Industries uses 4,000 components per year. After Wilfert Corporation submitted a bid of $80 per component, some members of management felt they could reduce costs by buying from outside and discontinuing production of the component. If the component is obtained from Wilfert Corporation, Furman Industries' unused production facilities could be leased to another company for $50,000 per year. Required: a. Determine the maximum amount per unit Furman Industries could pay an outside supplier. b. Indicate if the company should make or buy the component and the total dollar difference in favor of that alternative. c. Assume the company could eliminate one production supervisor with a salary of $30,000 if the component is purchased from an outside supplier. Indicate if the company should make or buy the component and the total dollar difference in favor of that alternative
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