Models of automatic dishwashers

Assignment Help Finance Basics

Reference no: EM13826302

Problem:

DeMarcus Industries manufactures a widget used in several models of its automatic dishwashers. Monthly production costs for 5,000 units are:

Direct materials $40,000

Direct labor 10,000

Variable support costs 25,000

Fixed support costs 20,000

Total costs $95,000

It is estimated that 20% of the fixed support costs assigned to the widgets will no longer be incurred if the company purchases the part from the outside supplier for $15.50 per unit. Considering all relevant information, what should DeMarcus do?

Additional Information:

This question is basically belongs to the Finance as well as it explains about the decision that the firm should take about purchasing the product.

Reference no: EM13826302

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