Question: Bacrometer Inc makes part no 566 on one of its
Bacrometer, Inc., makes part no. 566 on one of its production lines. Each month Bacrometer makes 60,000 of part no. 566 at a variable cost of $2.50 per part. The fixed costs for the production line are $180,000, or $3.00 per part. Bacrometer has been provided a bid for part no. 566 from another manufacturer that will make the part for $2.65 per part. Bacrometer knows the production line could be rented to another manufacturer for $5,000 per month. Should Bacrometer continue to make part no. 566 or should it buy the part and rent the production line?
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