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Marginora Manufacturing produces a component essential for its main product. The management is considering whether to make the component in-house or to buy it from
Marginora Manufacturing produces a component essential for its main product. The management is considering whether to make the component in-house or to buy it from an external supplier. The following information is provided: Current Production Costs for In-House Manufacturing of 5,000 units Direct Materials $915,000 Direct labor 460,000 Manufacturing overhead 675,000 Total Manufacturing Cost $2,050,000 Marginora Manufacturing's annual manufacturing overhead budget is 30% variable and 70% fixed. Atlead Construction, one of MarginoraManufacturing's reliable vendors, has offered to supply the component at a unit price of $336. MarginoraManufacturing anticipates needing 5,000 units of the component each year. 1. If Marginora Manufacturing purchases the 5,000 units from Atlead Construction, the capacity Marginora Manufacturing used to manufacture these parts would be idle. Should Marginora Manufacturing make or buy the component? What is the cost difference per unit to buy the part
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