Blossom Industries produces the component parts needed for its popular non-commercial-use drones. One of the key parts has become more costly to produce than first planned, however, so management is considering outsourcing that part. The costs to produc one such part internally include DM of $2.90, DL of $160, variable MOH of $0.50, and fixed MOH of $2.00. Blossom could purchase the part from a supplier for $5.90 each. If the company decides not to manufacture this part, 90% of its fixed MOH costs would continue. Should Blossom continue to make the part or buy it from the supplier? (Round answers to 2 decimal places.e.g. 15.25.) Relevant costs The company is better off Make buying the part. Buy
Blossom Industries produces the component parts needed for its popular non-commercial-use drones. One of the key parts has become more costly to produce than first planned, however, so management is considering outsourcing that part. The costs to produc one such part internally include DM of $2.90, DL of $160, variable MOH of $0.50, and fixed MOH of $2.00. Blossom could purchase the part from a supplier for $5.90 each. If the company decides not to manufacture this part, 90% of its fixed MOH costs would continue. Should Blossom continue to make the part or buy it from the supplier? (Round answers to 2 decimal places.e.g. 15.25.) Relevant costs The company is better off Make buying the part. Buy
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Se.119.
Transcribed Image Text:Blossom Industries produces the component parts needed for its popular non-commercial-use drones. One of the key parts has
become more costly to produce than first planned, however, so management is considering outsourcing that part. The costs to produce
one such part internally include DM of $2.90, DL of $1.60, variable MOH of $0.50, and fixed MOH of $2.00. Blossom could purchase
the part from a supplier for $5.90 each. If the company decides not to manufacture this part, 90% of its fixed MOH costs would
continue.
Should Blossom continue to make the part or buy it from the supplier? (Round answers to 2 decimal places, e.g. 15.25.)
Relevant costs $
Make
The company is better off buying
the part.
Buy
Transcribed Image Text:Blossom Industries produces the component parts needed for its popular non-commercial-use drones. One of the key parts
has become more costly to produce than first planned, however, so management is considering outsourcing that part. The
costs to produce one such part internally include DM of $2.90, DL of $1.60, variable MOH of $0.50, and fixed MOH of $2.00.
Blossom could purchase the part from a supplier for $5.90 each. If the company decides not to manufacture this part, 90%
of its fixed MOH costs would continue. Should Blossom continue to make the part or buy it from the supplier? (Round
answers to 2 decimal places. e.g. 15.25.) Relevant costs $ The company is better off Make buying the part. $ Buy
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