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Home Q & A Board Other Fields Homework Help Business Accounting
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bernie2981 bernie2981
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8 years ago
Moon Appliance manufactures a variety of appliances which all use Part B89. Currently, Moon Appliance manufactures Part B89 in its internal processing division. Moon Appliance produces 9,000 units of Part B89 annually. The annual costs to produce Part B89 at the level of 9,000 units include:

Direct materials   $3.00
Direct labor   $8.00
Variable manufacturing overhead   $4.00
Fixed manufacturing overhead   $3.00
Total cost   $18.00

All of the fixed manufacturing overhead costs would continue whether Part B89 is made internally or purchased from an outside supplier. Assuming Moon Appliance can purchase 9,000 units of the part from the Nadal Parts Company for $20.00 each, and the facilities currently used to make the part could be rented out to another manufacturer for $18,000 a year, what should Moon Appliance do?
A) Make the part and save $3.00 per unit.
B) Buy the part and save $7.00 per unit.
C) Make the part and save $7.00 per unit.
D) Buy the part and save $3.00 per unit.
Textbook 
Managerial Accounting

Managerial Accounting


Edition: 4th
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nucleinuclei
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8 years ago
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bernie2981 Author
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#2
8 years ago
You're such a dedicated member, I very much appreciate the help.

Marking this solved ✓
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