{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Make or buy decision

Make or buy decision - 3 If the company is interested in...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Make or buy decision 1. A B The variable costs: Direct materials $1.50 1.50 X .20= 1.20 Direct Labor 1.00 1.00 X .10= .90 Variable manufacturing overhead 0.30 .80-.50=. 30 x .90= .27 Purchase of cartridges .00 .48 Total variable Cost per box $ 2.80 $ 2.85 I believe the company should reject the purchase of the outside supplies. It would be cheaper to produce a box of pens. It would be cheaper by .05 per box. 2. The maximum amount that the company should be willing to pay should be .43 per box because it would only cost .43 internally to produce the product.
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 3. If the company is interested in the offer because of limited capacity, I would suggest that the company produce the 100,000 boxes at 2.80 per box for a total of $280,000 and purchase 50,000 boxes at 2.85 per box for a total cost of $142,500 in order to meet demand. 4. The factors that Bronson should take into account are Will the company be able to meet demand? Will the outsource company be reliable? Will the company be able to make a profit in the long run?...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern