A vendor has offered to supply a component for $38 (FOB destination) that has previously been manufactured

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A vendor has offered to supply a component for $38 (FOB destination) that has previously been manufactured internally.

Per unit

DM $18

DL6

Variable overhead3

Fixed Overhead4

Total cost$31

Suppose fixed costs cannot be avoided if the component is purchased from outside. Should the company make or buy if the vacated facilities are:

a.left idle?

b.Used for other purpose which generates net benefit of $ 10,000?

c. Rented out for $15,000

Posted Date: May 13, 2024 12:33 AM

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A vendor has offered to supply a component for $38 (FOB destination) that has previously been manufactured

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To determine whether the company should make or buy the component under different scenarios well compare the total cost of making internally with the ... View the full answer

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