Question
Ultimate Travel Company fabricates automobiles. Each auto includes one wiringharness, which is currently made inminus house. Details of the harness fabrication are asfollows: Volume 800
Ultimate Travel Company fabricates automobiles. Each auto includes one wiringharness, which is currently made inminus
house. Details of the harness fabrication are asfollows:
Volume
800
800
units per month
Variable cost per unit
$ 8
$8
per unit
Fixed costs
$ 13 comma 000
$13,000
per month
A factory in India has offered to supply Ultimate Travel with readyminus
made units for a cost of $ 9
$9 each. Assume that UltimateTravel's fixed costs areunavoidable, but the company could use the vacated production facilities to earn an additional $ 5 comma 000
$5,000 of profit per month. In order to maximize operatingincome, Ultimate Travel should outsource.
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Ethical Obligations and Decision Making in Accounting Text and Cases
Authors: Steven M. Mintz, Roselyn E. Morris
5th edition
1259969460, 73403997, 1260480852, 978-1259969461
