Industries incurs unit costs

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Reference no: EM13914124

Manson Industries incurs unit costs of $8 ($5 variable and $3 fixed) in making an assembly part for its finished product. A supplier offers to make 10,000 of the assembly part at $6 per unit. If the offer is accepted, Manson will save all variable costs but no fixed costs. Prepare an analysis showing the total cost saving, if any, Manson will realize by buying the part.

Make

Buy

Net Income

Increase (Decrease)

Variable manufacturing costs

Fixed manufacturing costs

Purchase price

Total annual cost

The decision should be to buymake the part.

Reference no: EM13914124

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