CIGI Industries has been buying a part of machinery for 1,000 each.Currently, it has an extra capacity to produce that part internally.The annual fixed of the unused capacity is 1,250,000.If CIGI decided to make the product, it will incur material cost of 350 per unit, labor cost of 300 per unit and variable overhead cost of 100 per unit.The future demand is 5000 units.Which decision is advantageous for the company?

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To evaluate the advantages of either manufacturing the parts inhouse or purchasing them externally w... View the full answer