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Fairhaven Company needs 1,000 motors in its manufacture of boats. It can buy the motors from Asian Motors for $1,250 each. Southwestern's plant can manufacture
Fairhaven Company needs 1,000 motors in its manufacture of boats. It can buy the motors from Asian Motors for $1,250 each. Southwestern's plant can manufacture the motors for the following costs per unit: Direct materials $ 600 Direct manufacturing labor 250 Variable manufacturing overhead 200 Fixed manufacturing overhead 350 Total $1,400 If Southwestern buys the motors from Jinx, 70% of the fixed manufacturing overhead applied will not be avoided. Required: Should the company make or buy the motors? b. What additional factors should Southwestern consider in deciding whether or NOT to make or buy the motors
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