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Marrow, Inc. is a manufacturing company, one of its products is product X. One of the components needed to manufacture product X is component X1.

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Marrow, Inc. is a manufacturing company, one of its products is product X. One of the components needed to manufacture product X is component X1. Currently Marrow manufactures X4 by itself. It reports the following information about the costs of making X4: Direct materials $100 per unit Direct labor $25 per unit Variable manufacturing overhead $10 per unit Fixed manufacturing overhead that can be avoided if X4 are not made $180,000 Fixed manufacturing overhead that cannot be avoided even if X4 are $500,000 not made Number of X4 needed 5,000 units Alabama recently received an offer from Georgia Corp, that wants to supply X4 to Alabama at $180 per unit. Required: 1. Suppose the capacity that is currently used to make x4 will become idle if Marrow purchases X4 from Georgia. Evaluate whether Marrow should make its own X4 or buy it from Georgia. 2. Without having to perform any calculation, explain how your answer in number 1 above would change, if Marrow has an alternative use of the capacity currently used to make X4. 3. Discuss non-financial factors that need to be considered by Marrow in deciding whether to make X4 by itself or buy it from Georgia

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