Lawnmowers from a number of different parts

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Reference no: EM13840956

Magic Lawnmower Company assembles lawnmowers from a number of different parts. Some of those parts are manufactured by Magic Lawnmower and some of the parts are purchased from other companies. The vendor for the blades that Magic Lawnmower uses has just increased the price of blades to $10 per blade for the first 5,000 blades and $9 per blade for all blades ordered during the year in excess of 5,000. Magic Lawnmower expects to use 7,500 blades this year. Magic lawnmower can make the blades for the following unit costs: Direct materials $3.50 Direct labor $1.75 Variable manufacturing overhead $4.25 Should Magic Lawnmower make the blades or continue to buy the blades from its vendor?

Reference no: EM13840956

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