Question
DHL produces 5,000 delivery drones annually. The manufacturing costs per drone are: Cost Component Amount per Drone Direct materials 200 Direct labor 150 Variable manufacturing
DHL produces 5,000 delivery drones annually. The manufacturing costs per drone are:
| Cost Component | Amount per Drone |
|---|---|
| Direct materials | €200 |
| Direct labor | €150 |
| Variable manufacturing overhead | €80 |
| Fixed manufacturing overhead | €50 |
| Total | €480 |
UPS offers to supply 5,000 drones at €450 each. Accepting the offer will save DHL €60,000 in fixed overhead.
- Perform a differential analysis to determine if DHL should make or buy the drones.
- Assess the total cost change if the offer is accepted.
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Accounting Information Systems
Authors: Marshall B. Romney, Paul J. Steinbart
12th edition
132552620, 978-0132552622
