Kampalot,Inc.manufactures pop-up campers.One of the component parts,RV3,is produced in-house by Kampalot.A supplier has approached the company with an offer to supply the RV3 part at a price of $45 per unit.Kampalot's current costs to manufacture the 20,000 RV3 parts it needs each year are:
Assuming there is no alternative use for its current production facilities,determine whether Kampalot should purchase the part from the supplier or continue making the part.Alternatively,if the facilities Kampalot uses to produce part RV3 could be rented for $75,000 per year,should the company continue to produce the part or purchase it instead?

Question

Kampalot,Inc.manufactures pop-up campers.One of the component parts,RV3,is produced in-house by Kampalot.A supplier has approached the company with an offer to supply the RV3 part at a price of $45 per unit.Kampalot's current costs to manufacture the 20,000 RV3 parts it needs each year are:
  Assuming there is no alternative use for its current production facilities,determine whether Kampalot should purchase the part from the supplier or continue making the part.Alternatively,if the facilities Kampalot uses to produce part RV3 could be rented for $75,000 per year,should the company continue to produce the part or purchase it instead?

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The Answer of Kampalot,Inc.manufactures pop-up campers.One of the component parts,RV3,is produced in-house by Kampalot.A supplier has approached the company with an offer to supply the RV3 part at a price of $45 per unit.Kampalot's current costs to manufacture the 20,000 RV3 parts it needs each year are:
  Assuming there is no alternative use for its current production facilities,determine whether Kampalot should purchase the part from the supplier or continue making the part.Alternatively,if the facilities Kampalot uses to produce part RV3 could be rented for $75,000 per year,should the company continue to produce the part or purchase it instead?