incremental analysis buy or make

Project Description:

junior company currently buys 30,000 units of a part used to manufacture its product at $40 per unit. recently the supplier informed junior company that a 20 percent increase will take effect next year. junior has some additional space and could produce the units for the following per-unit costs (based on 30,000 units):

direct materials $16
direct labor 12
variable overhead 12
fixed overhead 10
total $50

if the units are purchased from the supplier, $200,000 of fixed costs will continue to be incurred. in addition, the plant can be rented out for $20,000 per year if the parts are purchased externally.


should junior company buy the part externally or make it internally?
Skills Required:
Project Stats:

Price Type: Negotiable

Total Proposals: 8
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