Figure 13-7. Ring Company makes telephones.Currently,Ring makes all components of the telephones in-house.An outside company has offered to supply one component,part number X76,for $12 each.Ring uses 22,000 of these components per year.Costs of X76 are as follows:
Refer to Figure 13-7.Suppose that 30% of the fixed overhead is avoidable if part X76 is not made by Ring.Should Ring purchase the part from the outside supplier?

Question

Figure 13-7. Ring Company makes telephones.Currently,Ring makes all components of the telephones in-house.An outside company has offered to supply one component,part number X76,for $12 each.Ring uses 22,000 of these components per year.Costs of X76 are as follows:
 Refer to Figure 13-7.Suppose that 30% of the fixed overhead is avoidable if part X76 is not made by Ring.Should Ring purchase the part from the outside supplier?

Quizplus · Accepted Answer

The Answer of Figure 13-7. Ring Company makes telephones.Currently,Ring makes all components of the telephones in-house.An outside company has offered to supply one component,part number X76,for $12 each.Ring uses 22,000 of these components per year.Costs of X76 are as follows:
 Refer to Figure 13-7.Suppose that 30% of the fixed overhead is avoidable if part X76 is not made by Ring.Should Ring purchase the part from the outside supplier?