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The Blade Division of Axe Company produces hardened steel blades. Sales $ 15,154.54 total Variable costs $ 10,111.22 total Fixed costs $ 4,444.33 total Unit
The Blade Division of Axe Company produces hardened steel blades. | |||||
Sales | $ 15,154.54 | total | |||
Variable costs | $ 10,111.22 | total | |||
Fixed costs | $ 4,444.33 | total | |||
Unit sales per unit | 11,222 | ||||
A contract company has offered to sell Axe Company the steel blades used in the Forestry Division | |||||
for $1.23 per unit. $2,543.21 of the fixed cost for that division can be saved by contracting out | |||||
the steel blades. | |||||
What will be the price difference between continuing to make the steel blades and buying the steel blades? | |||||
And should the company continue to make the steel blades or buy the steel blades? |
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