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San Diego State University Operations And Supply Chain Management Assignment Help - Units


Question - Figure 12-2.
ColorPro uses part 87A in the production of color printers. Unit manufacturing costs of part 87A are:
Direct materials $8
Direct labor 2
Variable overhead 1
Fixed overhead-common costs 4
ColorPro uses 100,000 units of 87A per year. Filbert Company has offered to sell ColorPro 100,000
units of 87A per year for $12. Fixed overhead is unavoidable.
Refer to Figure 12-2. Now suppose that ColorPro discovers that other costs will increase by $7,000
per year if the component is purchased rather than made internally. Should ColorPro make or buy the
part?


a. buy the part because it will save $100,000 over making it
b. make the part because it will save $107,000 over buying it
c. buy the part because it will save $107 ...Read More

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