Question
Please Answer this ASAP! Office Corporation is a manufacturer of custom office equipment. The firm has been approached by an external supplier who is interested
Please Answer this ASAP!
Office Corporation is a manufacturer of custom office equipment. The firm has been approached by an external supplier who is interested in supplying the firms timber. The firm currently fabricates its own timber and the costs to do this include: Total (3,400 metres per quarter) Per metre Variable production costs $51,000 $15.00 Fixed production costs $28,900 $8.50 The external supplier has offered to supply timber for $22.00 per metre. It would cost $2,500 per quarter to check externally purchased timber for quality. If the timber was bought from the external supplier, fixed production costs would be reduced by $3,000 per quarter. The space vacated by the area currently used to fabricate timber in house can be rented for $4,000 per quarter. Required: Compare the incremental costs and savings from acquiring the timber from the external supplier and discuss whether the proposal to use the external supplier is acceptable. As part of your overall evaluation, consider both financial, social and environmental factors.
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