CH. 4 Question 5 A company is considering outsourcing production of one of its products. The company has received a bid from another company to produce 10,000 units per year for $16 each. The following information: Direct Materials $9 Direct Labor $4 Variable Manfuacturing OH $2 Fixed Manufacturing OH $3 Total Cost per unit $18 1) Compute the difference in cost between making and buying the product 2) Should the company buy the product from the other company or continue to make it themselves?
CH. 4 Question 5 A company is considering outsourcing production of one of its products. The company has received a bid from another company to produce 10,000 units per year for $16 each. The following information: Direct Materials $9 Direct Labor $4 Variable Manfuacturing OH $2 Fixed Manufacturing OH $3 Total Cost per unit $18 1) Compute the difference in cost between making and buying the product 2) Should the company buy the product from the other company or continue to make it themselves?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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CH. 4 Question 5
A company is considering outsourcing production of one of its products. The company has received a bid from another company to produce 10,000 units per year for $16 each. The following information:
Direct Materials $9
Direct Labor $4
Variable Manfuacturing OH $2
Fixed Manufacturing OH $3
Total Cost per unit $18
1) Compute the difference in cost between making and buying the product
2) Should the company buy the product from the other company or continue to make it themselves?
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