Power Tools, Inc

Essay

Power Tools, Inc.produces gas-powered leaf blowers.The company is currently not operating at full capacity.The plant manager is considering making the rewind assembly for the pull cord which is now being purchased from a supplier at $22 each.Power Tools already has the equipment to produce the assembly.The plant manager has analyzed the cost of producing the assemblies and determined that each assembly will require $8 of direct material, $6 of direct labor, and $12 of manufacturing overhead.Two-thirds 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?