Penbirch Electronics manufactures most of the components that make up its products. A company has approached Penbirch
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Question:
Penbirch Electronics manufactures most of the components that make up its products. A company has approached Penbirch offering to sell them A-12 Motherboards for $52 each, a component that they currently manufacture in-house. Cost information for an A-12 is given below:
Cost per Unit | |
Direct materials | $ 17.50 |
Direct labour | 12.75 |
Manufacturing overhead | 28.75 |
Total cost per unit | 59.00 |
The manufacturing overhead is made up of $14.50 per unit in variable costs and $14.25 in fixed cost allocations that will be assigned to other products if Penbirch accepts the offer.
Should Penbirch continue to manufacture the A-12 Motherboards or should they purchase them from the outside supplier?
Related Book For
Managing Information Technology
ISBN: 978-0132146326
7th Edition
Authors: Carol Brown, Daniel DeHayes, Jeffrey Hoffer, Wainright Marti
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