Question

Wilson Corporation produces a large number of fishing products. The costs per unit of a particular fishing reel are as follows:
Direct materials and direct labor. . . . . . . . . . . . . . . . . . . . . . . $7.00
Variable factory overhead. . . . . . . . . . . . . . . . . . . . . . . . .. 4.00
Fixed factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . .. 2.00
The company recently decided to buy 10,000 fishing reels from another manufacturer for $12.50 per unit because “it was cheaper than our cost of $13.00 per unit.” Evaluate the decision made by Wilson’s management based on the data given.



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  • CreatedApril 21, 2014
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