Biology Forums - Study Force

The Inland Corporation manufactures 1,000 motors that are used in the production of its go-karts. Inland has been approached by an outside supplier that will sell the motor to Inland for $39 each. Inland's cost to manufacture each motor are as follows:

Direct material	$25
Direct labor	8
Variable overhead	4
Fixed overhead	6
Total	$43

All fixed overhead is unavoidable and is allocated based on machine hours. The facilities that are used to manufacture the motors have no alternative uses.

Required:

a.	Should Inland continue to manufacture the motors?

b.	Would your answer change if Inland could lease the facilities previously used to

produce
the motors for $4,800 per year?

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