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Problem 47 Lone Star Fabrication make widgets, selling them in the USA and 10 different countries. In making the widget, there is a sub-assembly, call
Problem 47 Lone Star Fabrication make widgets, selling them in the USA and 10 different countries. In making the widget, there is a sub-assembly, call it "Sub-Assembly K". Total cost to manufacture, Sub-Assembly K is $13 ($9 variable cost and S4 fixed cost). An outside supplier offers to make 10,600 of the sub-assemblies for $11/per unit. If accepted, Lone Star Fabrication will save all of the variable costs, but none of the fixed costs. Part 1 - Assuming that there are no other uses for the assembly area, should Lone Star purchase the parts from the outside supplier ? Yes or No And, why using the space below to show your calculations. Total cost to manufacture, Sub-Assembly Kis $13 ($9 variable cost and 54 fixed cost). An outside supplier offers to make 10,600 of the sub-assemblles for $11/per unit. If accepted, Lone Star Fabrication will save all of the variable costs, but none of the fixed costs. Part 1 - Assuming that there are no other uses for the assembly area, should Lone Star purchase the parts from the outside supplier ? And, why using the space below to show your calculations. Yes or No Problem 48 Part 2 - Assuming that there was an alternative use for the assembly area, and that the alternative use would generate a net cash flow benefit to Lone Star Fabrication of $ 35,000 Should Lone Star purchase the parts from the outside supplier ? Yes or No And, why using the space below to show your calculations
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