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MSI is considering outsourcing the production of the handheld control module used with some of its products. The company has recelved a bid from Monte
MSI is considering outsourcing the production of the handheld control module used with some of its products. The company has recelved a bid from Monte Legend Co. (MLC) to produce 21,000 units of the module per yearfor $24.00 each. The following information pertains to MSI's production of the control modules: MSi has determined that it could ellminate all variable costs if the control modules were produced externaliy, but none of the fixed overhead is avoidable At this time, MSI has no specific use in mind for the space that is currently dedicated to the control module production. Required: 1. Compute the difference in cost between making and buying the control module. 2. 5hould MSI buy the modules from MLC or continue to make them? 3-0. Suppose that the MSI space currenty used for the modules could be utlized by a new product line that would gerierate $29,000 in annual profit. Recompute the difference in cost between making and buying under this scenario. 3-b. Does this change your recommendation to MSI? Complete this question by entering your answers in the tabs below. Compute the diference in cost between making and buying the control module
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