University Of North Texas Operations And Supply Chain Management Assignment Help - Make or buy
Question - The ski selected is a mass market ski with a special binding and will be sold for $80 per pair. A
$125000 fixed charge will be absorbed by the ski, however, to allocate a fair share of the company's
present fixed cost to the new product.
Using the estimated sales and production of 10000 pair of skis as the expected volume,
Direct labor $35
Direct material 30
Total overhead 15
Total cost $80
They discussed the purchasing of the binding from a subcontractor at $5.25 per binding, or $10.50
per pair with direct-labor and variable cost would be reduced by 10% and direct materials costs would
be reduced by 20%.
Should the Corporation make or buy the bindings? Show calculations to support answer.
Solution Preview - No Solution Preview Available