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*** NO SOLUTION STEPS ARE REQUIRED. JUST THE ANSWERS *** Current-Control, Inc.. manufactures a variety of electrical switches. The company is currently manufacturing all of
*** NO SOLUTION STEPS ARE REQUIRED. JUST THE ANSWERS ***
Current-Control, Inc.. manufactures a variety of electrical switches. The company is currently manufacturing all of its own component parts. An outside supplier has offered to sell a switch to Current-Control for $17 per unit. To evaluate this offer. Current-Control. Inc., has gathered the following information relating to its own cost of producing the switch internally: *40% supervisory salaries; 60% depreciation of special equipment (no resale value). Required: a. Assuming that the company has no alternative use for the facilities now being used to produce the switch, compute the total cost of making and buying the parts. b. Should the outside supplier's offer be accepted? Accept Reject a. Suppose that if the switches were purchased, Current-Control, Inc., could use the freed capacity to launch a new product. The segment margin of the new product would be $34, 200 per year. Compute the total cost of making and buying the parts. b. Should Current-Control, Inc., accept the offer to buy the switches from the outside supplier for $17 each? Accept Reject
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