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Wildcat Company currently buys 50,000 units of a part used to manufacture its product at S100 per unit. Recently the supplier informed Wildcat Company that
Wildcat Company currently buys 50,000 units of a part used to manufacture its product at S100 per unit. Recently the supplier informed Wildcat Company that a 20 percent increase will take effect next year. Wildcat has some additional . space and could produce the units for the following per-unit costs (based on 50,000 units): $36 34 Direct materials Direct labor Variable overhead Fixed overhead 26 $126 Total If the units are purchased from the supplier, Wildcat would continue to incur $250,000 of fixed costs. Required a. Should Wildcat Company buy the parts externally or make them internally? Prepare differential analysis to support your decision Should Wildcat Company buy the parts externally or make them internally, assuming that they can rent the plant to support your decision. b. 0 per year to XYZ Corporation when the parts are purchased externally? Prepare differential analysis
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