International Paper Corporation manufactures 10,000 rolls of paper each period. The paper is used as an input for producing several other products that International Paper manufactures. The full manufacturing costs for a batch of 50 rolls of paper are as follows:
The fixed manufacturing overhead is comprised of depreciation expenses related to prior investments in facilities and equipment that are used in the manufacturing of the paper. These assets have no other use than for the manufacturing of the paper. An outside supplier has offered to sell International Paper the 10,000 rolls of paper necessary to meet production needs this period for a lump-sum of $72,500.
What should International Paper Corporation do if it wants to maximize its profit for the period?

Question

International Paper Corporation manufactures 10,000 rolls of paper each period. The paper is used as an input for producing several other products that International Paper manufactures. The full manufacturing costs for a batch of 50 rolls of paper are as follows:
  The fixed manufacturing overhead is comprised of depreciation expenses related to prior investments in facilities and equipment that are used in the manufacturing of the paper. These assets have no other use than for the manufacturing of the paper. An outside supplier has offered to sell International Paper the 10,000 rolls of paper necessary to meet production needs this period for a lump-sum of $72,500.
What should International Paper Corporation do if it wants to maximize its profit for the period?

Quizplus · Accepted Answer

The Answer of International Paper Corporation manufactures 10,000 rolls of paper each period. The paper is used as an input for producing several other products that International Paper manufactures. The full manufacturing costs for a batch of 50 rolls of paper are as follows:
  The fixed manufacturing overhead is comprised of depreciation expenses related to prior investments in facilities and equipment that are used in the manufacturing of the paper. These assets have no other use than for the manufacturing of the paper. An outside supplier has offered to sell International Paper the 10,000 rolls of paper necessary to meet production needs this period for a lump-sum of $72,500.
What should International Paper Corporation do if it wants to maximize its profit for the period?

International Paper Corporation Manufactures 10,000 Rolls of Paper Each Period