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Should Wood Chuck make or buy the cushions

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Reference no: EM132765206

Question - Wood Chuck Furniture currently manufactures rocking chairs as its main product. Each chair uses one seat cushion and one back cushion with the following costs per set of cushions (one seat and one back): Direct materials $ 1.00 Direct labour 10.00 Variable overhead 5.00 Fixed overhead 8.00 Total $24.00 Sherpert Company has contacted Wood Chuck with an offer to sell it 5,000 sets of cushions for $18.00 each. If Wood Chuck makes the cushions, $5 of the fixed overhead per unit will be allocated to other products. Should Wood Chuck make or buy the cushions?

Reference no: EM132765206

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