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Home Q & A Board Other Fields Homework Help Business Accounting
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LiChan LiChan
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7 years ago
The managers of Desks Inc. are considering purchasing the handles for the desks from an outside vendor for $4.50 each. The following cost information is provided to assist in the decision:
   Per unit   
   Direct material   $1.75
   Direct labor   1.45
   Variable overhead   .70
   Fixed overhead   1.10
   Total   $5.00
Should Desk Inc. continue to manufacture the handles in house or should it purchase the handles from an outside vendor, if fixed cost remains unchanged?
A) Yes, they should manufacture the handles in house, it costs $3.20 to make and $4.50 to purchase.
B) No, it's always better to buy from someone else and not have the hassles of producing the product in house.
C) Yes, they should manufacture the handles in house, it costs $3.90 to make and $4.50 to purchase.
D) No, they should not manufacture the handles in house, it costs $5.00 to make and $4.50 to purchase.
Textbook 
Survey of Accounting: Making Sense of Business

Survey of Accounting: Making Sense of Business


Edition: 1st
Author:
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suryoyosuryoyo
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#1
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7 years ago
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LiChan Author
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#2
7 years ago
Was looking for this exact answer, thanks
wrote...
#3
7 years ago
Alright!
Thumbs up me, please!
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