Piels Corporation produces a part that is used in the manufacture of one of its products....
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Piels Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows: Direct materials Direct labor Variable factory overhead Fixed factory overhead Total costs $ 90,000 130,000 60,000 140,000 $420,000 Of the fixed factory overhead costs, $60,000 is avoidable (goes away if the part is outsourced). Conners Company has offered to sell 10,000 units of the same part to Piels Corporation for $36 per unit. Assuming there is no other use for the facilities, what should Piels do from a quantitative perspective? for a) Make / Buy un spOAG b) What is the quantitative difference in the two options? 000 000 c) What are 2 qualitative considerations Piels should consider? Piels Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows: Direct materials Direct labor Variable factory overhead Fixed factory overhead Total costs $ 90,000 130,000 60,000 140,000 $420,000 Of the fixed factory overhead costs, $60,000 is avoidable (goes away if the part is outsourced). Conners Company has offered to sell 10,000 units of the same part to Piels Corporation for $36 per unit. Assuming there is no other use for the facilities, what should Piels do from a quantitative perspective? for a) Make / Buy un spOAG b) What is the quantitative difference in the two options? 000 000 c) What are 2 qualitative considerations Piels should consider?
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a Make Buy Decision To determine whether Piels should make or buy the part we need to compare the re... View the full answer
Related Book For
Management Accounting
ISBN: 978-0132570848
6th Canadian edition
Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu
Posted Date:
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