Question
Rough N' Tough (RNT) manufactures outdoors accessories. Management is considering producing the poles for their tents rather than continuing to purchase from their current supplier.
Rough N' Tough (RNT) manufactures outdoors accessories. Management is considering producing the poles for their tents rather than continuing to purchase from their current supplier. The supplier charges $60 per set of poles.
The cost accounting team has estimated that RNT would incur the following costs if they were to produce the poles instead: $40 per set for direct materials, $10 per set for direct labor, $7 per set for variable overhead, and $20 per set for fixed overhead application.
RNT currently has unused production capacity and manufacturing equipment that could be used to manufacture the poles. RNT has planned to sell 5,000 tents this year.
Required:
- What amount would the disadvantage or advantage (select one) of purchasing be?
- Should RNT Make or Buy the poles for their tents?
- What qualitative factors (other than cost) should RNT consider?
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Statistical Models And Analysis In Auditing
Authors: National Research Council, Division On Engineering And Physical Sciences, And Applications Commission On Physical Sciences, Mathematics, Board On Mathematical Sciences, Committee On Applied And Theoretical Statistics, Panel On Nonstandard Mixtures Of Distributions
1st Edition
0309078172, 978-0309078177
