Question
Mack Company produces bulbs. Cost per bulb is as follows: Direct Material $12.00 Direct Labor $8.00 Variable Overhead $9.50 Fixed Overhead $9.00 Total Manufacturing cost
Mack Company produces bulbs. Cost per bulb is as follows:
| Direct Material | $12.00 |
| Direct Labor | $8.00 |
| Variable Overhead | $9.50 |
| Fixed Overhead | $9.00 |
| Total Manufacturing cost per bulb | $38.50 |
Another company has offered to sell each bulb at $30.00 to Mack Company. If Mack Company decides to buy the bulb, it will continue to pay a lease on its factory, thus, fixed cost is unavoidable.
Prepare an outsourcing analysis (show your work for full credit).
Should Mack Company make or buy the bulb? (Be sure to give a reason to justify your answer).
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Strategic Audits For Continuous Business Improvement
Authors: Parbatee Chang
2nd Edition
1507679483, 978-1507679487
