Q3

Leftington Company is currently manufacturing Part P123. It produces 48.100 units of Part P123 per year. This part is used in the manufacturing of many products produced by Leftington. The breakdown of the cost per unit for P123 is shown below. The fixed overhead cost (at dollar5.00/unit above) would still remain with the company even if Leftington stops manufacturing Part P123. An outside supplier has offered to sell the same part to Leftington for dollar 10.00. Currently. there is no alternative use for the capital assets used to produce Part P123. These capital assets will not be sold if the company chooses to buy Part P123. Do not enter dollar signs or commas in the input boxes. Use the negative sign for a negative change in operating income. Should Leftington Company make or buy Part P123? Cost to Make: dollar Cost to Buy: dollar Therefore Leftington should: Buy What is the maximum price Leftington should be willing to pay an outside supplier for the part? Maximum Price: S If Leftington buys the part for S12 instead of making it, by how much will operating income increase or decrease? Change in operating income: dollar