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Big Waves Boat Company currently buys from a supplier 10,000 units of a part used to manufacture its product at $240 per unit. Recently, the
Big Waves Boat Company currently buys from a supplier 10,000 units of a part used to manufacture its product at $240 per unit. Recently, the supplier informed Big Waves that a 10% increase will take effect next year. Big Waves has some additional space and could produce the units for the following per-unit costs (based on 10,000 units): Direct materials $175 Direct labor 20 Variable overhead 40 Fixed overhead 35 Total $270 If the units are purchased from the supplier, $125,000 of fixed costs will continue to be incurred. In addition, the plant can be rented out for $140,000 per year if the parts are purchased externally. Required: Round your answer to the nearest dollar. A. The total cost for Big Waves to produce the part internally (instead of purchasing the part externally) is $ than if it produced the product B. If Big Waves decides to purchase the part externally instead of producing it internally), the company's total cost will be internally by $ C. Based on financial considerations alone, the best decision (i.e., either make the part or buy the part) for Big Waves is to the part
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