Radio Company makes several models of radios for the auto industry. One of the components is currently
Question:
Radio Company makes several models of radios for the auto industry. One of the components is currently purchase for $ 220.00 per 100 units. Management is reviewing the possibility of making the part in-house. Annual production of this one model radio is 70,000 units. Fixed costs are $ 38,500.00 (which is unchanged whether the part is made or purchased), variable cost per unit for direct materials is $ 0.70, $ 0.55 per unit for direct labor, and $ 0.70 per unit for variable overhead. Using the incremental analysis, make a decision as to whether Radio Company should manufacture the part or purchase the part from an outside vendor. (8 points)
Make Buy Difference In favor of Make
Direct Materials __________________ _________ _________ _____________
Direct Labor __________________ _________ _________ _____________
Variable Overhead _______________ _________ _________ _____________
Purchased Parts _________________ _________ _________ _____________
Totals $ _________ $ _________ $ _____________
Decision: __________________________________________________________________
International Business Law and Its Environment
ISBN: 978-0324649659
7th Edition
Authors: Richard schaffer, Filiberto agusti, Beverley earle