The company is now producing the heavy duty gear shifters used in its most popular...

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The company is now producing the heavy – duty gear shifters used in its most popular line of mountain bikes, the company's accounting department reports the following costs of producing the shifter internally: 8000units 48000 Per unit Direct materials Direct labour 6. 4 32000 Variable overhead 1 8000 Supervisor salary Depreciation of special equipment Allocated general overhead Total cost 24000 2 16000 40000 21 168000 An outside supplier has offered to sell mountain coat cycles 8000 units a year at a price of only 19 S each. Required: Should the company stop producing the shifters internally and start purchasing them from the outside supplier? (Make or buy analysis). The company is now producing the heavy – duty gear shifters used in its most popular line of mountain bikes, the company's accounting department reports the following costs of producing the shifter internally: 8000units 48000 Per unit Direct materials Direct labour 6. 4 32000 Variable overhead 1 8000 Supervisor salary Depreciation of special equipment Allocated general overhead Total cost 24000 2 16000 40000 21 168000 An outside supplier has offered to sell mountain coat cycles 8000 units a year at a price of only 19 S each. Required: Should the company stop producing the shifters internally and start purchasing them from the outside supplier? (Make or buy analysis).

Answer rating: 100% (QA)

Solution Supervisor salary and allocated overheads are un... View the full answer