Make Versus Buy: Samaneh's SKateboard Company produces high quality skateboards at affordable prices with over 10 different types of skateboards. Most of the manufacturing occurs in Hawaii. The top of the line product is a Tony Hawk-like skateboard. Current production plans call for the manufacture of 2,400 Hawk Skateboards at an average cost of 370 dollars. An Indian manufacturer has offered to produce 800 of the same skateboards at 272 dollars. If the Indian offer is accepted, Samaneh will cut production of the Hawk skateboards from 2,400 to 1,600. The finance department estimates that the average cost of each gold pen will rise from 370 dollars to 425 dollars. Should Samaneh outsource the manufacture of 800 skateboards to India? Please offer a financial justification. What is Samaneh's unit variable cost per skateboard, and what is her fixed costs and total variable costs? Given your answer in part (a), what additional information from a balanced perspectives would you seek before deciding to outsource the 800 gold pens?

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To determine whether Samaneh should outsource the manufacture of 800 skateboards to India we need to evaluate the financial justification Lets calculate the unit variable cost per skateboard and deter... View the full answer