Question
Answer all questions in Microsoft Word/Excel and submit the answers (with detailed working) Electroexperts Inc. has received a special marketing choice from one of the
Answer all questions in Microsoft Word/Excel and submit the answers (with detailed working)
Electroexperts Inc. has received a special marketing choice from one of the world's electronic suppliers. The suppliers want to sell Electroexperts Inc. a certain electronic component for $18 per unit. Electroexperts Inc. makes the part, and its management is considering the buying choice seriously.
Unit manufactured $5,000
Direct materials cost $30,000
Direct labor cost $40,000
Fixed costs $20,000
Variable costs of $10,000
a) If Electroexperts Inc. buys the part, its fixed costs will reduce by 60% and the variable costs will reduce by 95%. Perform incremental analysis and determine whether Electroexperts Inc. should buy the part or continue making the part.
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