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J CO must decide whether to make or buy The cost for 166,000 units are as follows
DM 90,000
DL 20,000
Variable OH 32,000
Fixed OH 24,000
Instead of making the chords at $1 per unit the company has an opportunity to buy them at 0.90 per unit from china.
If company buy chords, all VC and ¼ of fixed costs will be eliminated.
Problem a. Prepare an analysis whether make or buy the chords
Problem b. Will your answer be different if the released capacity will generate additional income of $5,000.
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