Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

X Company currently buys 7,500 units of a part each year from a supplier for $7.80 per part, but it is considering making the part

X Company currently buys 7,500 units of a part each year from a supplier for $7.80 per part, but it is considering making the part instead. In order to make the part, X Company will have to buy equipment that will cost $150,000. The equipment will last for 6 years, at which time it will have zero disposal value. X Company estimates that it will cost $26,050 a year to make all 7,500 units.

What is the approximate rate of return if X Company makes the part instead of buying it from the supplier?

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

Measuring Business Interruption Losses And Other Commercial Damages An Economic Approach

Authors: Patrick A. Gaughan

3rd Edition

1119647916, 9781119647911

More Books

Students also viewed these Accounting questions

Question

I had a problem last week; they would think I am picky or a whiner!

Answered: 1 week ago