Essay
Brian Company manufactures a part for its production cycle.The annual costs per unit for 20,000 units of this part are as follows:
Brian Company has been approached by a supplier who will sell 20,000 units of the same part for $940,000.All the fixed indirect production costs are unavoidable if Brian Company ceases production of the part.
Required:
A)Assuming there is no alternative use for the facilities,should Brian Company buy or make the part?
B)Assume the facilities can be rented out for $100,000 per year.Should Brian Company buy the part? If so,how much money will be saved?
Correct Answer:
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A) Alternatives: Make part: ($15 + $12 +...View Answer
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