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Should Cannon Co make or buy this part

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Reference no: EM132754627

Question - Cannon Co. has been producing a part for a camera they manufacture. The costs for this part are as follows:

Fixed costs $392,000

Total variable costs $112,000

Units produced 28,000

Cannon has an opportunity to purchase this part rather than manufacture it. To purchase the part will cost $3 a unit. If the part is purchased, fixed costs will be reduced by 20%.

Required - Should Cannon Co. make or buy this part? Show how you arrived at your decision.

Reference no: EM132754627

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