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BHO Manufacturing Corp. is using 10,000 units of part no. 300 as a component to assemble one of its products. It costs the company $18
BHO Manufacturing Corp. is using 10,000 units of part no. 300 as a component to assemble one of its products. It costs the company $18 per unit to produce it internally, computed as follows: Direct materials $ 45,000 Direct labor 50,000 Variable overhead 40,000 Fixed overhead 45,000 Total cost $180.000 An outside vendor has just offered to supply the part for $16 per unit. If the company stops producing this part, one-third of the fixed overhead would be avoided. Should the company make or buy? Make. It's 15,000 cheaper to make internally. Buy. It's 15,000 cheaper to buy from the vendor. Buy. It's 10,000 cheaper to buy from the vendor. Make. It's 10,000 cheaper to make internally
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