Lasso Corporation manufactures a variety of appliances which all use Part B89. Currently, Lasso manufactures Part B89 itself. It has been producing 14,000 units of Part B89 annually. The annual costs of producing Part B89 at the level of 14,000 units include: All of the fixed manufacturing overhead costs would continue whether Part B89 is made internally or purchased from an outside supplier. Assume Lasso can purchase 14,000 units of the part from the Nadal Parts Company for $20.40 each, and the facilities currently used to make the part could be used to manufacture 14,000 units of another product that would have a $11 per unit contribution margin. If no additional fixed costs would be incurred, what should Lasso do?

Question

Lasso Corporation manufactures a variety of appliances which all use Part B89. Currently, Lasso manufactures Part B89 itself. It has been producing 14,000 units of Part B89 annually. The annual costs of producing Part B89 at the level of 14,000 units include:  All of the fixed manufacturing overhead costs would continue whether Part B89 is made internally or purchased from an outside supplier. Assume Lasso can purchase 14,000 units of the part from the Nadal Parts Company for $20.40 each, and the facilities currently used to make the part could be used to manufacture 14,000 units of another product that would have a $11 per unit contribution margin. If no additional fixed costs would be incurred, what should Lasso do?

Quizplus · Accepted Answer

The Answer of Lasso Corporation manufactures a variety of appliances which all use Part B89. Currently, Lasso manufactures Part B89 itself. It has been producing 14,000 units of Part B89 annually. The annual costs of producing Part B89 at the level of 14,000 units include:  All of the fixed manufacturing overhead costs would continue whether Part B89 is made internally or purchased from an outside supplier. Assume Lasso can purchase 14,000 units of the part from the Nadal Parts Company for $20.40 each, and the facilities currently used to make the part could be used to manufacture 14,000 units of another product that would have a $11 per unit contribution margin. If no additional fixed costs would be incurred, what should Lasso do?

Lasso Corporation Manufactures a Variety of Appliances Which All Use