Solution-Should the company continue to purchase the part

Should the company continue to purchase the part

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Reference no: EM131798770

Marcus Company assembles products from a group of interconnecting parts. Some of the parts are produced by the company, and some are purchased from outside vendors. The vendor for Part X has just increased its price by 35 percent, to $10 per unit for the first 5,000 units and $9 per additional unit ordered each year. The company uses 7,500 units of Part X each year. Unit costs if the company makes the part are:

Direct materials $3.50

Direct labor 1.75

Variable manufacturing overhead 4.25

Variable selling costs for the assembled product 3.75

Should the company continue to purchase the part, or should it begin making the part?

Reference no: EM131798770

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Should the company continue to purchase the part

Reference no: EM131798770

Reference no: EM131798770

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