Nelly Technology manufactures a particular computer component. Currently, the costs per unit are as follows: Direct material P 50 Direct labor 500 Variable overhead 250 Fixed overhead 400 Fur Inc. has obtained Nelly with a offer to sell 10,000 units of the component for P1,100 per unit. If Nelly accepts the proposal, P2,500,000 of the fixed overhead will be eliminated. Should Nelly make or buy the component?

Nelly Technology manufactures a particular computer component. Currently, the costs per unit are as follows: Direct material P 50 Direct labor 500 Variable overhead 250 Fixed overhead 400 Fur Inc. has obtained Nelly with a offer to sell 10,000 units of the component for P1,100 per unit. If Nelly accepts the proposal, P2,500,000 of the fixed overhead will be eliminated. Should Nelly make or buy the component?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 5P

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