Lawson Company produces a part that has the following costs per unit: Crest Corporation can provide the part to Lawson for $19 per unit.Lawson Company has determined that 60 percent of its fixed overhead would continue if it purchased the part.However,if Lawson no longer produces the part,it can rent that portion of the plant facilities for $60,000 per year.Lawson Company currently produces 10,000 parts per year.Which alternative is preferable and by what margin?
A)Make-$20,000
B)Make-$50,000
C)Buy-$10,000
D)Buy-$40,000

Question

Lawson Company produces a part that has the following costs per unit:  Crest Corporation can provide the part to Lawson for $19 per unit.Lawson Company has determined that 60 percent of its fixed overhead would continue if it purchased the part.However,if Lawson no longer produces the part,it can rent that portion of the plant facilities for $60,000 per year.Lawson Company currently produces 10,000 parts per year.Which alternative is preferable and by what margin?
A)Make-$20,000 
B)Make-$50,000 
C)Buy-$10,000 
D)Buy-$40,000

Quizplus · Accepted Answer

The Answer of Lawson Company produces a part that has the following costs per unit:  Crest Corporation can provide the part to Lawson for $19 per unit.Lawson Company has determined that 60 percent of its fixed overhead would continue if it purchased the part.However,if Lawson no longer produces the part,it can rent that portion of the plant facilities for $60,000 per year.Lawson Company currently produces 10,000 parts per year.Which alternative is preferable and by what margin?
A)Make-$20,000 
B)Make-$50,000 
C)Buy-$10,000 
D)Buy-$40,000

Lawson Company Produces a Part That Has the Following Costs