Question
The Wilson Company manufactures football helmets. It currently produces the liners for their helmets. The cost information for producing liners is: Relevant Variable Costs per
The Wilson Company manufactures football helmets. It currently produces the liners for their helmets. The cost information for producing liners is: Relevant Variable Costs per liner Direct Material Costs $170 Direct Labor Cost $ 45 Indirect Cost $ 12 Total Fixed Costs - $1,210,000 Overhead costs that could be eliminated if the liners are sourced $310,000 Overhead costs that cannot be eliminated $900,000
Wilson needs 10,000 liners. Rawling has offered to furnish the liners to Wilson at $250 per liner.
2A For 10,000 liners, calculate the relevant manufacturing costs, the purchase costs and the net saving or loss for purchasing instead of producing the liners.
2B Should Wilson purchase or continue to produce the liners?
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