Answered

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What is the financial advantage (disadvantage) of making the 73,000 starters instead of buying them from an outside supplier

Sagot :

Parrain

Answer: Financial advantage of $43,800

Explanation:

The cost to make the starters:

= Direct materials + Direct labor + Variable manufacturing overhead + Supervisor salary

= (6 * 73,000) + (3 * 73,000) + ( 0.6 * 73,000) + (1.90 * 73,000)

= $839,500

Cost to buy them = 73,000 * 12.10

= $883,300

Financial advantage (disadvantage) to making them = 883,300 - 839,500

= $43,800

Rent and depreciation are not relevant to this decision because rent is not directly attributable to this product and depreciation is not based on wear and tear.

View image Parrain
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