Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please show work so I can understand better. Thank you! Part 4 (2 points) Sprinkay has discovered that a small fitting it now manufactures at

image text in transcribed

Please show work so I can understand better. Thank you!

Part 4 (2 points) Sprinkay has discovered that a small fitting it now manufactures at a cost of $1.00 per unit could be bought elsewhere for $0.82 per unit. Sprinkay has fixed costs of $0.20 per unit that cannot be eliminated by buying this unit. Sprinkay needs 460,000 of these units each year. If Sprinkay 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. Sprinkay uses approximately 500 of these units each year. The cost of the unit is $12.66. To aid in the production of this unit, Sprinkay would need to purchase a new machine at a cost of $2,345, and the cost of producing the units would be $9.90 a unit. Instructions Given the information above: (a) Without considering the possibility of making the timing unit, evaluate whether Sprinkay should buy or continue to make the small fitting. (b) (1) What is Sprinkay' opportunity cost if it chooses to buy the small fitting and start manufacturing the timing unit? (2) Would it be wise for Sprinkay to buy the fitting and manufacture the timing unit? Explain

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Foundations Of Managerial Accounting

Authors: Dr. Susan Galbreath

1st Edition

0390786276, 978-0390786272

More Books

Students also viewed these Accounting questions

Question

Write the Ksp expression Ag2SO4.

Answered: 1 week ago

Question

6. Identify six components of professionalism .

Answered: 1 week ago

Question

e. What difficulties did they encounter?

Answered: 1 week ago