Penguin Company needs 10,000 units of Part A to use in one of its products. The following information is available:??

Cost to Penguin to make Part A:??

Direct Materials	$6
Direct Labour	$14
Variable Manufacturing Overhead	$7
Fixed Manufacturing Overhead	$10
Total Manufacturing Cost Per Unit	$37

Giraffe Company has offered to sell Part A to Penguin Company for $36. If Penguin were to buy Part A from Giraffe instead of making it, 40% of the fixed manufacturing overhead costs would continue. If Penguin were to buy Part A from Giraffe, Penguin would be able to use the manufacturing facility to produce Part B that would generate a segment margin of $20,000.

Should Penguin make Part A or purchase from Giraffe? (Show all calculations)

Answer rating: 100% (QA)

Should Penguin make or purchase Part A Heres the analysis to help Pe... View the full answer