Accounting: What the Numbers Mean
Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
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Chapter 16, Problem 16.3ME

Mini-Exercise 16.3

LO 2. 3

The make or buy decision In addition to the product cost information for Lakeside, Inc., in Mini-Exercise 16.1, product engineering has determined that a certain part of the product conversion process could he outsourced. Raw material costs would not be affected, but direct labor and variable overhead costs would be reduced by 30%. No other opportunity is currently feasible for unused production capacity.

Required:

Should Lakeside outsource part of the conversion process at a cost of $4 per unit?

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