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Pueblo Production Company manufactures 50,000 high-definition televisions each year. Pueblo is ...

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Pueblo Production Company manufactures 50,000 high-definition televisions each year. Pueblo is ...

Pueblo Production Company manufactures 50,000 high-definition televisions each year. Pueblo is considering purchasing the glass screens from an outside source rather than producing them internally. The following data relate to the glass screens:

Cost per screen from outside supplier	$ 32.50
Internal costs per screen
Direct materials	17.50
Direct labor	8.25
Variable overhead	2.60
Total fixed overhead	67,000
Avoidable fixed overhead	50,400

Should Pueblo purchase or produce the screens, and what is the savings associated with the decision?

▸ Produce the screens and save $207,500.

▸ Purchase the screens and save $207,500.

▸ Purchase the screens and save $157,100.

▸ Produce the screens and save $157,100.

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Managerial Accounting

Edition: 4^th

Author: Davis

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Thanks for your help!!

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