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(B)Fairhaven Company needs 1,000 motors in its manufacture of boats. It can buy the motors from Asian Motors for $1,250 each. Fairhaven's plant can
(B)Fairhaven Company needs 1,000 motors in its manufacture of boats. It can buy the motors from Asian Motors for $1,250 each. Fairhaven's plant can manufacture the motors for the following costs per unit: Direct materials 600 Direct manufacturing labor 250 Variable manufacturing overhead 200 350 Total 1,400 Fixed manufacturing overhead If Fairhaven buys the motors from Asian Motors, 70% of the fixed manufacturing overhead applied will not be avoided. Required: III. IV. Should the company make or buy the motors? (3 marks) What additional factors should Fairhaven consider in deciding whether or NOT to make or buy the motors? Soovo (2 marks)
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