Waterways Continuing Problem 20 a, b1-b2 (Part 2) Waterways has discovered that a small fitting it now manufactures at a cost of $1.00 per unit could be bought elsewhere for $0.83 per unit. Waterways has fixed costs of $0.20 per unit that cannot be eliminated by buying this unit. Waterways needs 452,000 of these units each year. If Waterways decides to buy rather than produce the small fitting, it can devote the machinery and labor to making a timing unit it now buys from another company. Waterways uses approximately 400 of these units each year. The cost of the unit is $12.56. To aid in the production of this unit, Waterways would need to purchase a new machine at a cost of $2,321, and the cost of producing the units would be $9.70 a unit. |Your answer is incorrect. Try again. Without considering the possibility of making the timing unit, evaluate whether Waterways should buy or continue to make the small fitting. The company should buy the fitting. Incremental cost / (savings) will be $ 1808 LINK TO TEXT LINK TO TEXT LINK TO TEXT | Your answer is incorrect. Try again. What is Waterways' opportunity cost if it chooses to buy the small fitting and start manufacturing the timing unit? The opportunity cost is 13560 LINK TO TEXT LINK TO TEXT LINK TO TEXT |Your answer is incorrect. Try again. Would it be wise for Waterways to buy the fitting and manufacture the timing unit? The company should buy small fittings and make the timing units.
Waterways Continuing Problem 20 a, b1-b2 (Part 2) Waterways has discovered that a small fitting it now manufactures at a cost of $1.00 per unit could be bought elsewhere for $0.83 per unit. Waterways has fixed costs of $0.20 per unit that cannot be eliminated by buying this unit. Waterways needs 452,000 of these units each year. If Waterways decides to buy rather than produce the small fitting, it can devote the machinery and labor to making a timing unit it now buys from another company. Waterways uses approximately 400 of these units each year. The cost of the unit is $12.56. To aid in the production of this unit, Waterways would need to purchase a new machine at a cost of $2,321, and the cost of producing the units would be $9.70 a unit. |Your answer is incorrect. Try again. Without considering the possibility of making the timing unit, evaluate whether Waterways should buy or continue to make the small fitting. The company should buy the fitting. Incremental cost / (savings) will be $ 1808 LINK TO TEXT LINK TO TEXT LINK TO TEXT | Your answer is incorrect. Try again. What is Waterways' opportunity cost if it chooses to buy the small fitting and start manufacturing the timing unit? The opportunity cost is 13560 LINK TO TEXT LINK TO TEXT LINK TO TEXT |Your answer is incorrect. Try again. Would it be wise for Waterways to buy the fitting and manufacture the timing unit? The company should buy small fittings and make the timing units.
Chapter14: Capital Structure Management In Practice
Section14.A: Breakeven Analysis
Problem 5P
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT