RDP Manufacturing Company needed to determine if it would be cheaper to make 8,300 units of...

 

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RDP Manufacturing Company needed to determine if it would be cheaper to make 8,300 units of components in-house or to purchase them from an outside supplier for $4.75 each. Cost information is as follows if 10,000 units are produced: DM DL VOH FOH $10,000 $20,000 $7,500 $44,000 FOH will be reduced by $16,000 if the item is purchased externally. Questions How much is the differential cost between the two alternatives? At what number of units would it be difficult to make a decision based on cost basis alone? Possible Scores 5 51 RDP Manufacturing Company needed to determine if it would be cheaper to make 8,300 units of components in-house or to purchase them from an outside supplier for $4.75 each. Cost information is as follows if 10,000 units are produced: DM DL VOH FOH $10,000 $20,000 $7,500 $44,000 FOH will be reduced by $16,000 if the item is purchased externally. Questions How much is the differential cost between the two alternatives? At what number of units would it be difficult to make a decision based on cost basis alone? Possible Scores 5 51

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