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need help with breaking down the relevant costs Waterways has discovered that a small fitting it now manufactures at a unit cost of $1.00 could
need help with breaking down the relevant costs
Waterways has discovered that a small fitting it now manufactures at a unit cost of $1.00 could be bought elsewhere for $0.82 per unit. Waterways has unit fixed manufacturing costs of $0.20 that cannot be eliminated by buying this unit. Waterways needs 460.000 of these units each year. If Waterways decides to buy rather than produce the small fitting, it can devote the machinery and labor to making a timing unit it now buys from another company. Waterways uses approximately 500 of these units each year. The cost of the unit is 512.66 . To aid in the production of this unit, Waterways would need to purchase a new machine at a cost of $2.345, and the unit cost of producing the units would be $9.90 Would it be wise for Waterways to buy the fitting and manufacture the timing unit? The company should small fittings and the timing units Step by Step Solution
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