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Make or Buy All of the peripheral devices produced by Swore and Bore use the same cable to connect the device to a USB port
Make or Buy All of the peripheral devices produced by Swore and Bore use the same cable to connect the device to a USB port on a computer. The company has been producing this cable in-house for some time. Another company, "LimeWire", has approached the production manager with a proposition to sell the necessary cables to Swore and Bore. Data related to the cost of making a single USB cable is below: The contract with LimeWire would be for 10,000 USB cables at a cost of $5.60 per cable. Per Unit 10,000 Units Direct Materials $2.30 $23,000 Direct Labour $1.30 $13,000 Variable Manufacturing Overhead $1.10 $11,000 Fixed Manufacturing Overhead, Traceable $1.00 $10,000 Fixed Manufacturing Overhead, Common (Allocated) $1.30 $13,000 Total Cost $7.00 $70,000 **Required: Should Swore and Bore purchase the cables from LimeWire, or continue to produce them internally. Support your answer with a Make or Buy analysis. - 6 Marks
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