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Part II: Problems (56 total points) Paramount Bikes, Inc. uses 10,000 derailleurs in its bicycles each year. Derailleurs currently cost the company $18.96 per unit
Part II: Problems (56 total points) Paramount Bikes, Inc. uses 10,000 derailleurs in its bicycles each year. Derailleurs currently cost the company $18.96 per unit to manufacture, determined as follows (8 points): Direct Materials Direct Labor 1. 48,200 57,800 29,600 Variable Manufacturing Overhead Fixed Manufacturing Overhead $189,600 Total Costs Cost per unit ($189,600/10,000 units) 18.96 Paramount Bikes, Inc. has been approached by an outside supplier that will provide derailleurs at a price of $15 per unit. If Paramount Bikes, Inc., stops producing derailleurs, the direct materials, direct labor and variable manufacturing overhead will be eliminated, as well as $25,000 of the fixed manufacturing overhead. Should Paramount Bikes make or buy the derailleurs? Provide financial and nonfinancial support for your answer. make Direc Dreet 48203
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