Drakeford company produces some of the parts they use and

Reference no: EM13566292

Drakeford Company produces some of the parts they use and they buy some from outside vendors. The vendor for part A has just increased its price to $10 for the first 5,000 units; $15 for the next 5,000 units ; and $20 for more than 10,000 units per year. The company uses 8,000 units of part A each year. Unit costs if the company makes the part are as follows: Direct materials $3.50 Direct labor 3.00 Variable overhead 4.00 Variable selling costs for the assembled product 3.75 Should Drakeford Company continue to purchase part A or begin making it?

Reference no: EM13566292

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