Business, 17.12.2019 22:31 tra80

Frederick co. is thinking about having one of its products manufactured by an outside supplier.

currently, the cost of manufacturing 5,000 units is:
direct material $ 62,000
direct labor 47,000
variable factory overhead 38,000
factory overhead 52,000
if frederick can buy 5,000 units from an outside supplier for $130,000, it should:

a. make the product because the cost of direct material plus direct labor of manufacturing is less than $130,000.
b. make the product because factory overhead is a sunk cost.
c. buy the product because the total incremental costs of manufacturing are greater than $130,000.
d. buy the product because total fixed and variable manufacturing costs are greater than $130,000.
e. make the product because current factory overhead is less than $130,000.

Answers: 3

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Frederick co. is thinking about having one of its products manufactured by an outside supplier.