Question: + Make or Buy Jacobson Company is considering a proposal from another company for that company to sell to Jacobson the 30,000 units of a
+ Make or Buy Jacobson Company is considering a proposal from another company for that company to sell to Jacobson the 30,000 units of a key component that Jacobson uses in manufacturing its air conditioning machines which it sals to its customers. The outside supplier would charge Jacobson 548 per unit Currently, Jacobson makes the component in house and has determined its cost per unit as the following Direct materials $20 Direct inbour 3 Variable overhead 12 Fixed overhead 10 based on volume of 30,000 units) Total cost $50 Jacobson has determined that only 25% of the fixed overhead is actually traceable to the manutecture of this component and would therefore be avoided if the component was purchased from the outside suppler Required: Should jacobson Company continue to make the component itself should it buy the component from the outside supplier (show all calculations) (4 marks)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
