Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Cube Manufacturing usually produces its own parts for assembly. The following monthly data are available for one of the parts, Part A31: Manufacturing costs
Cube Manufacturing usually produces its own parts for assembly. The following monthly data are available for one of the parts, Part A31: Manufacturing costs Variable per unit Fixed costs Nonmanufacturing costs Variable per unit Fixed costs $ 6 15,000 1 9,000 Cube needs 2,000 units of Part A31 every month. An outside supplier offers to deliver that part for $11.50 each. By accepting the offer, Cube can save half of the fixed manufacturing costs and all variable costs, but the fixed nonmanufacturing costs are not affected. Required: 1. Should Cube Manufacturing accept the offer and outsource Part A31? Why? 2. If the facility used to produce Part A31 can be leased out to generate a monthly rental income of $3,000, what should Cube Manufacturing do?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started