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Sunland Industries produces the component parts needed for its popular non-commercial-use drones. One of the key parts has become more costly to produce than first
Sunland Industries produces the component parts needed for its popular non-commercial-use drones. One of the key parts has become more costly to produce than first planned, however, so management is considering outsourcing that part. The costs to produce one such part internally include DM of $2.60, DL of $1.80, variable MOH of $0.50, and fixed MOH of $3.00. Sunland could purchase the part from a supplier for $6.60 each. If the company decides not to manufacture this part, 70% of its fixed MOH costs would continue. Should Sunland continue to make the part or buy it from the supplier? (Round answers to 2 decimal places, e.g. 15.25.) Total cost Make The company is better off the part. Buy Oriole's currently manufactures art supplies, including markers. The marker sales generate total contribution margin of $83,900. Due to its fixed costs, however, that product line currently shows a net operating loss of $10,400. If Oriole's drops markers from its product categories, it will save $72,900 in direct fixed costs associated with the marker production activities. Should Oriole's drop its marker product line? Why or why not? (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Operating income $ Keep -10400 Oriole's should not drop the marker product line. The company will be worse off by $ SA Drop if it drops the product line
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