Paper Moon, a Manufacturer of Outdoor Lighting Fixtures Is Operating

Essay

Paper Moon, a manufacturer of outdoor lighting fixtures is operating at less than full capacity.The plant manager is considering making the mounting brackets now being purchased from a supplier at $8 each.Paper Moon already has the equipment to produce the brackets.The plant manager has analyzed the cost of producing the brackets and determined that each bracket will require $2 of direct material, $1 of direct labor, and $8 of manufacturing overhead.Seventy-five percent of the manufacturing overhead is a fixed cost that would not be affected by the decision to manufacture the brackets.Should Paper Moon continue to purchase the brackets or produce them internally?