Time Company needs 1,000 engines for its automobile manufacturing. You can buy the motors from Shelly Motors
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Question:
- Time Company needs 1,000 engines for its automobile manufacturing. You can buy the motors from Shelly Motors for $1,250 each. Time's plant can manufacture the engines for the following costs per unit:
- Direct materials $500
- Direct manufacturing labor 250
- Variable manufacturing overhead 200
- Fixed manufacturing overhead 350
- Total $1,300
- If Time buys the engines from Shelly, 70 % of fixed manufacturing overhead applied not avoided. Should the company make or buy the motors?
Related Book For
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
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