Bullitt Corp. needs a make-or-buy decision for several of its products. For one product, the variable cost per part is $13.50. Fixed costs traceable to the part are $2,000, of which $1,000 is avoidable if the part is discontinued from production. Bullitt has allocated $2,500 of corporate overhead to the part. The current level of production is 1,000 units. An outside supplier will sell the part at a price of $15 per unit if 1,000 units are purchased.

Required:

Assess whether Bullitt should continue to produce this part internally or whether it should purchase it from the outside supplier.

Answer rating: 100% (QA)

Make Buy Variable Cost 13500 Purchase Co... View the full answer