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London, Inc. uses 2,000 units of Part 8G3 each year in the manufacture of one of its products. The company currently produces the part internally,
London, Inc. uses 2,000 units of Part 8G3 each year in the manufacture of one of its products. The company currently produces the part internally, but an outside supplier has offered to provide the part at a price of $15 per part. If London choose to purchase the part from the standard unit cost of producing the part is listed below. Direct material Direct labor Variable manufacturing ove Fixed manufacturing overhe Total unit cost 15 Required: 16 17 lgnoring qualitative factors, should London continue to make the parts internally or purchase 18 them from the outside supplier? Why? 20 Make Buy Purchase price of tube Direct material Direct labor Variable overhead Direct fixed overhead Relevant cost per unit Number of units Total costs
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