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Category > Accounting Posted 09 Jun 2017 My Price 7.00

The make or buy decision Redbud Company uses a certain part

The make or buy decision Redbud Company uses a certain part in its manufacturing process that it buys from an outside supplier for $44 per part plus another $6 for shipping and other purchasing-related costs. The company will need 10,000 of these parts in the next year and is considering making the part internally. After performing a capacity analysis, Redbud determined that it has sufficient unused capacity to manufacture the 10,000 parts but would need to hire a manager at an annual salary of $40,000 to oversee this production activity. Estimated production costs are determined to be:

Required:

a. Identify the relevant costs to make this part internally.

b. Should Redbud produce the part or continue to buy it from the outside supplier?

c. What other factors are important to this decision?

 

Answers

Alpha Geek
(8)
Status NEW Posted 09 Jun 2017 07:06 AM My Price 7.00

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Attachments

file 1496992915-2085972_1_636325145846146055_Make-or-Buy-option.xlsx preview (294 words )
20-----------859-----------72&-----------amp-----------;am-----------p;i-----------nfo-----------Id=-----------477-----------836-----------The----------- ma-----------ke -----------or -----------buy----------- de-----------cis-----------ion----------- Re-----------dbu-----------d C-----------omp-----------any----------- us-----------es -----------a c-----------ert-----------ain----------- pa-----------rt -----------in -----------its----------- ma-----------nuf-----------act-----------uri-----------ng -----------pro-----------ces-----------s t-----------hat----------- it----------- bu-----------ys -----------fro-----------m a-----------n o-----------uts-----------ide----------- su-----------ppl-----------ier----------- fo-----------r $-----------44 -----------per----------- pa-----------rt -----------plu-----------s a-----------not-----------her----------- $6----------- fo-----------r s-----------hip-----------pin-----------g a-----------nd -----------oth-----------er -----------pur-----------cha-----------sin-----------g-r-----------ela-----------ted----------- co-----------sts-----------. T-----------he -----------com-----------pan-----------y w-----------ill----------- ne-----------ed -----------10,-----------000----------- of----------- th-----------ese----------- pa-----------rts----------- in----------- th-----------e n-----------ext----------- ye-----------ar -----------and----------- is----------- co-----------nsi-----------der-----------ing----------- ma-----------kin-----------g t-----------he -----------par-----------t i-----------nte-----------rna-----------lly-----------. A-----------fte-----------r p-----------erf-----------orm-----------ing----------- a -----------cap-----------aci-----------ty -----------ana-----------lys-----------is,----------- Re-----------dbu-----------d d-----------ete-----------rmi-----------ned----------- th-----------at -----------it -----------has----------- su-----------ffi-----------cie-----------nt -----------unu-----------sed-----------
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