Question: Please answer this question correctly, thanks I will leave a like! Crane industries manufactures 99000 digital cameras each year. Crane has been producing the lenses
Crane industries manufactures 99000 digital cameras each year. Crane has been producing the lenses internally. However, late last year the company received an offer to produce the 162000 lenses the company uses each year for a total contract price of $404000. When Crane manufactures the lenses internally, direct materials cost \$1 per lens, direct labor is $1 per lens, and variable overhead is $0 per lens. Crane's total overhead is $134000. If the lens were purchased, $48000 of fixed overhead could be avoided. Should Crane purchase or produce the lenses, and what is the savings associated with the decision? Purchase the lenses and save $6000. Produce the lenses and save $6000. Produce the lenses and save $32000. Purchase the lenses and save $32000
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
