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Star Appliance manufactures a variety of appliances which all use Part 92F. Currently, the company manufactures Part 92F itself. It has been producing 8,000 units
Star Appliance manufactures a variety of appliances which all use Part 92F. Currently, the company manufactures Part 92F itself. It has been producing 8,000 units of Part 92F annually. The annual costs of producing one Part 92F at this level is: Total fixed manufacturing overhead costs would continue whether Part 92F is made internally or purchased form an outside supplier. Star Appliance has no alternative use for the manufacturing facilities. Roger Parts Company has offered to sell 8,000 units of Part 92F to Star Appliance for $22.00 per unit. What should Star Appliance do? Make the part and save $4 per unit. Make the part and save $10 per unit. Buy from Roger Parts Company and lose $1 per unit. Make the part and save $13 per unit
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