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Question 11 (10 points) Cubic Limited currently produces all components for its most popular computer monitor. A supplier has approached Cubic with an opportunity to
Question 11 (10 points) Cubic Limited currently produces all components for its most popular computer monitor. A supplier has approached Cubic with an opportunity to purchase part X for $18 per unit. The cost breakdown for Cubic to produce each monitor is: direct labour: $12/unit: direct materials: $4/unit: variable manufacturing overhead: $1.75/unit: and fixed manufacturing overhead: $4.25/unit If Cubic decides to purchase the part instead of continuing to manufacture it, they would reduce direct labour costs by $9/unit and reduce direct materials by $2.40/unit. Cubic produces 22.000 of this model each year. Required. Prepare an analysis of both options for the Production Manager. Your analysis must include a recommendation of whether Cubic should purchase part from an external supplier or continue to manufacture the part. WRITE YOUR ANSWER ON A SHEET OF PAPER AND UPLOAD IT TO YOUR BRIGHTSPACE DROPBOX SHOW ALL WORKINGS
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