Question
Company A has to decide whether to manufacture internally or to buy or contract from outsiders. Company A is able to contract with another company
Company A has to decide whether to manufacture internally or to buy or contract from outsiders. Company A is able to contract with another company to supply them ready make at $5 each. The details of Company A internal production costs are as follows: Direct material/unit $2.00 Direct labor/unit $3.00 Variable production overhead $0.50 Fixed production overhead $0.50 Total production per unit cost $6.00 Required 16500 total per unit manufactuirng cost 20000 total per unit cost if company purchae from outsiders per unit additional profit if company purchase from outsiders
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