Discuss the following case study. In doing so, explain your approach to the problem, support your approach with references, and execute your approach.
Submit a paper which is 2 pages in length, exclusive of the reference page. Paper should be double spaced in Times New Roman (or its equivalent) font which is no greater than 12 points in size. The paper should cite 2-3 sources in APA format. One source can be your textbook.
In this paper, please discuss the following case study. In doing so, explain your approach to the problem, support your approach with references, and execute your approach. Provide an answer to the case study’s question with a recommendation.
Case Study:
Assume that a firm has prepared the following cost estimates for the manufacture of a sub assembly component based on an annual production of 8,000 units.
Per Unit
Total
Direct materials
$5
$40,000
Direct labor
$4
$32,000
Variable factory overhead applied
$4
$32,000
Fixed factory overhead applied (150% of direct labor cost)
$6
$48,000
Total Cost
$19
$152,000
The supplier has offered to provide the sub assembly at a price of $16 each. Two-thirds of fixed factory overhead, which represents executive salaries, rent, depreciation, and taxes, continue regardless of the decision. Should the company buy or make the product?
