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Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello
Edition 17ISBN: 978-0078025778Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello
Edition 17ISBN: 978-0078025778 Exercise 47
Make or Buy Decision
Bacrometer, Inc., makes part no. 566 on one of its production lines. Each month Bacrometer makes 5,000 of part no. 566 at a variable cost of $2 per part. The monthly fixed costs for the production line are $20,000, or $4 per part. Bacrometer has been provided a bid for part no. 566 from another manufacturer that will make the part for $3 per part. Bacrometer knows the production line could be rented to another manufacturer for $6,000 per month. Should Bacrometer continue to make part no. 566 or should it buy the part and rent the production line?
Bacrometer, Inc., makes part no. 566 on one of its production lines. Each month Bacrometer makes 5,000 of part no. 566 at a variable cost of $2 per part. The monthly fixed costs for the production line are $20,000, or $4 per part. Bacrometer has been provided a bid for part no. 566 from another manufacturer that will make the part for $3 per part. Bacrometer knows the production line could be rented to another manufacturer for $6,000 per month. Should Bacrometer continue to make part no. 566 or should it buy the part and rent the production line?
Explanation
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Make or buy decision
Sometimes company ...
Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello
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