Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Waterways has discovered that a smali fitting it now manufactures at a unit cost of $1.00 could be bought elsewhere for $0.82 per unit. Waterways

image text in transcribed
image text in transcribed
Waterways has discovered that a smali fitting it now manufactures at a unit cost of $1.00 could be bought elsewhere for $0.82 per unit. Waterways has unit fixed manufacturing costs of $0.20 that cannot be eliminated by buying this unit. Waterways needs 434,000 of these units each year. If Waterways decides to buy rather than produce the small fitting, it can devote the machinery and labor to making a timing unit it now buys from another company. Waterways uses approximately 400 of these units each year. The cost of the unit is $13.18. To aid in the production of this unit. Waterways would need to purchase a new machine at a cost of $2,346, and the unit cost of producing the units would be $10.10. (a) Without considering the possibility of making the timing unit, evaluate whether Waterways should buy or continue to make the smali fitting. The company should the fitting Incremental cost/ (savings) will be $ What is Waterways' opportunity cost if it chooses to buy the small fitting and start manufacturing the timing unit? The opportunity cost is

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Modern Auditing

Authors: Guadarshan S. Gill, Cosserat Graham, Leung Philomena, Coram Paul

5th Edition

0471340723, 978-0471340720

More Books

Students also viewed these Accounting questions