Question
Wilson Corporation produces a large number of fishing products. The costs per unit of a particular fishing reel are as follows: Direct materials and direct
Wilson Corporation produces a large number of fishing products. The costs per unit of a particular fishing reel are as follows:
Direct materials and direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7.00
Variable factory overhead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.00
Fixed factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.00
The company recently decided to buy 10,000 fishing reels from another manufacturer for $12.50 per unit because it was cheaper than our cost of $13.00 per unit. Evaluate the decision made by Wilsons management based on the data given.
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