The Inland Corporation manufactures 1,000 motors that are used in the production of its go-karts.Inland has been approached by an outside supplier that will sell the motor to Inland for $39 each.Inland's cost to manufacture each motor are as follows:
Direct material $25
Direct labor $8
Variable overhead $4
Fixed overhead $6
Total $43
All fixed overhead is unavoidable,and is allocated based on machine hours.The facilities that are used to manufacture the motors have no alternative uses.
Required:
a.Should Inland continue to manufacture the motors?
b.Would your answer change if Inland could lease the facilities previously used to produce the motors for $4,800 per year?
Unit 8-3,

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The Answer of The Inland Corporation manufactures 1,000 motors that are used in the production of its go-karts.Inland has been approached by an outside supplier that will sell the motor to Inland for $39 each.Inland's cost to manufacture each motor are as follows:
Direct material $25
Direct labor $8
Variable overhead $4
Fixed overhead $6
Total $43
All fixed overhead is unavoidable,and is allocated based on machine hours.The facilities that are used to manufacture the motors have no alternative uses.
Required:
a.Should Inland continue to manufacture the motors?
b.Would your answer change if Inland could lease the facilities previously used to produce the motors for $4,800 per year?
Unit 8-3,

The Inland Corporation Manufactures 1,000 Motors That Are Used in the Production