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HUI Outsourcing Decision E3B. One component of an electronic door lock produced by System Security, Inc., is currently being purchased for $300 per 100 parts.
HUI Outsourcing Decision E3B. One component of an electronic door lock produced by System Security, Inc., is currently being purchased for $300 per 100 parts. Management is studying the possibility of manufacturing that component. Annual production (usage) is 100,000 units; fixed costs all of which remain unchanged whether the part is made or purchased) are $50,500; and variable costs are $2.00 per unit for direct materials, $0.75 per unit for direct labor, and $0.95 per unit for variable overhead. Using incremental analysis, decide whether System Security should manufacture the part or continue to purchase it from an outside vendor
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