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The Outland Company manufactures 5,000 units of a part that could be purchased from an outside supplier for $16 each. Outland's costs to manufacture each
The Outland Company manufactures 5,000 units of a part that could be purchased from an outside supplier for $16 each. Outland's costs to manufacture each part are as follows: All fixed overhead is unavoidable and is allocated based on direct labor. The facilities that are used to manufacture the part have no alternative uses. (a) Calculate relevant cost to make. Relevent cost to make $ per unit (b) Should Outland continue to manufacture the part? (c) If Outland could lease the manufacturing facilities to another company for $25,000 per year, what would be the net total cost to outsource production of the part? Net cost to buy $ (d) Should Outland outsource production of the part given the opportunity to lease the facilities
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