Yonkers Inc. has been manufacturing 5,000 units per month of part 1051, which is used to make one of its products. At this level of production, the cost per unit of manufacturing Part 1051 is:
Direct materials		$ 3.00
Direct labour		$ 11.00
Variable manufacturing overhead		$ 4.00
Fixed manufactruing overhead		$ 6.00
Unit cost		$ 24.00
Black Co. has offered to sell Yonkers 5,000 units of Part 1051 for $22 a unit. Yonkers has determined that it could use the facilities currently used to maufacture Part 1051 to manufacture Product RRR, which would generate an additional contribution margin per month of $15,000. Yonkers has als determined that one third of the fixed manufacturing overhead applied will be saved if the company purchases Part 1051 from Black and makes Product RRR.
Requried:
Should Yonkers make or buy Part 1051? Show calculations. Provide at least 1 qualitative issue Yonkers management should consider in making this decision. (10 marks)