Question
7. Gordon Corporation has the following information for their product (per unit): Sales $75.00 Direct labor $10.00 Direct materials $15.00 Variable overhead $7.50 Fixed overhead
7. Gordon Corporation has the following information for their product (per unit): Sales $75.00 Direct labor $10.00 Direct materials $15.00 Variable overhead $7.50 Fixed overhead $12.50 The above information is based on production of 10,000 units. The company can produce 30,000 units annually. Another company has offered to supply the same part for a cost of $35 per unit. The company will not be able to avoid any fixed costs if they buy the product instead of make it. "A. Should the company continue to make the part or buy it? Show your calculations to support your answer. " B. If they buy the part, what would the dollar impact to net income be?
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