Considering buying the hard drives for the laptops

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Reference no: EM133650396

Question

New Bedford Company manufactures laptop computers. They are considering buying the hard drives for the laptops rather than manufacturing them. The costs to manufacture the hard drives for each laptop are as follows: Direct Materials $30.50, Direct Labor $18.00, Variable Factory Overhead $6.45, Fixed Factory Overhead $7.60. The price to purchase each hard drive is $60.00. Should New Bedford make or buy hard drives, and why should they make or buy them? Make the hard drive; buying will net a loss of $5.05 per hard drive Buy the hard drive; buying will net a $7.60 cost saving per hard drive Make the hard drive; buying will net a loss of $6.45 per hard drive Buy the hard drive; buying will net a $12.90 cost saving per hard drive.

Reference no: EM133650396

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