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ruise company produces a part that is used in the manufacture of one of its products. the unit manufacturing costs of this part, assuming a production level of 6,000 units, are as follows: assume cruise company can purchase 6,000 units of the part from suri company for $14.00 each, and the facilities currently used to make the part could be used to manufacture 6,000 units of another product that would have an $8 per unit contribution margin. if no additional fixed costs would be incurred, what should cruise company do?

Respuesta :

KunalYadav273

According to the research below, it is preferable to purchase the component, create the new product, and contribute an additional $3.20 per unit to profit.

What is the short definition of a company?

A corporate structure that is distinct from its owners legally is a corporation. Due to additional reporting and higher-level legal duties, the business structure is more complicated and has greater setup and administration expenses.

Briefing:

Here, we get to pick between making and purchasing decisions.

The making cost is = Direct material per unit + direct labor per unit + variable manufacturing overhead per unit

= $4 + $4 + $3

= $11

And, the buying cost is $14.20

Therefore, the cruise line should manufacture the component and save $3.20, i.e.

= $14.20 - $11

= $3.20

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