Question: I A B C D E F G H FDR Corp. estimates it will produce 30,000 units of a part that goes into its final

 I A B C D E F G H FDR Corp.

I A B C D E F G H FDR Corp. estimates it will produce 30,000 units of a part that goes into its final product. It Hurrently produces this part internally, but is considering outsourcing this activity. Current nternal capacity permits for a maximum of 60,000 units of the part. The production manager has prepared the following information concerning the internal manufacture of 60,000 units bf the part: Direct materials Direct labor Variable overhead Fixed overhead Total cost Per unit $3.00 4.00 5.00 6.00 $18.00 The fixed overhead of $6 per unit includes a $1.50 per unit allocation for salary paid to a upervisor to oversee production of the part. The fixed costs would not be reduced by 16 utsourcing, except the supervisor would be terminated. Assume that if FDR outsources, 17 Its purchase price from the oursourcer is $12 per unit. 19 REQUIRED: 20 . Should FDR outsource? Provide support for your answer. (9 pts) 21 . Assume FDR has received a special order for 10,000 units of the part from Alpha Corp. 22 Alpha will pay FDR $23 per part, but will take the parts only if th y have been manufactured 28 y FDR. Thus, Alpha will engage in the special order only if FDR des not outsource any f its production. Should FDR accept the special order? Explain why or why not. (9 pts) 3

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