Question
A vendor has offered to supply a component for $38 (FOB destination) that has previously been manufactured internally. Per unit DM $18 DL6 Variable overhead3
- A vendor has offered to supply a component for $38 (FOB destination) that has previously been manufactured internally.
Per unit
DM $18
DL6
Variable overhead3
Fixed Overhead4
Total cost$31
Suppose fixed costs cannot be avoided if the component is purchased from outside. Should the company make or buy if the vacated facilities are:
a.left idle?
b.Used for other purpose which generates net benefit of $ 10,000?
c. Rented out for $15,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To determine whether the company should make or buy the component under different scenarios well compare the total cost of making internally with the ...
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Step: 2
Step: 3
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Intermediate Accounting
Authors: kieso, weygandt and warfield.
14th Edition
9780470587232, 470587288, 470587237, 978-0470587287
