Should rsw make or buy the wheel sets

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Reference no: EM131944428

RSW Company manufactures 15,000 units of wheel sets for use in its annual production. Costs are as follows:

Direct materials 42,000 Direct Labor 63,000 Variable manufacturing overhead 58,000 Fixed manufacturing overhead 76,000 Rayco Company has offered tosell RSW 15,000 units of wheel sets for 14 per unit.

if RSW accepts the offer, some of the facilities presently used to manufacture wheels sets could be rented to a third party at an annual rental of 25,500. in addition 43,000 of fixed overhead would be totally eliminated.

Prepare an incremental analysis schedule to demonstrate if RSW should accept Rayco's offer

Make	Buy
Additional Rental Income	Amount	Amount
Costs
Direct materials	Amount	Amount
Direct labor	Amount	Amount
Variable manufacturing overhead	Amount	Amount
Fixed manufacturing overhead	Amount	Amount
Purchase cost	Amount	Amount
Total manufacturing cost	Amount	Amount

Should RSW make or buy the wheel sets? Explain

Reference no: EM131944428

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