Producing the engines, a. GOGO should buy the engines for

Producing the engines

Reference no: EM131017620

GOGO Golf Carts currently produces its own electric motors. Electco has offered to sell the electric motors to GOGO at a price of $300 each. GOGO's current production information for the motors follows: Unit-level material and labor $175 Facility-level depreciation of manufacturing equip. $12,000/year Product-level supervisor's salary $24,000/year Annual facility-level utilities $1,500 GOGO is currently operating profitably producing 2,000 engines a year. GOGO maintains worker loyalty by offering employees lifetime employment. Which of the following is true?

a. GOGO should buy the engines for cost savings of $113 per unit.

b. GOGO should continue producing the engines.

c. GOGO has relevant costs of greater than $300 a unit and should buy.

d. GOGO will save $126,000 by producing the engines.

Reference no: EM131017620

Questions Cloud

Which of the following statements is true of s-corporation : Cadmium Electronics Inc. currently has a capital structure that is 40% debt and 60% equity. If the firm's cost of equity is 12%, the cost of debt is 8%, and the risk-free rate is 3%, what is the appropriate WACC?

What is the sunk cost in this situation : Jason Company is considering replacing equipment that originally cost $600,000. New equipment costs $500,000, and the old equipment can be sold for $400,000. What is the sunk cost in this situation?

Placing an advertisement within the local newspaper : Leila had lost her gold locket and chain. She had been highly distressed. Hence, she made an approach by placing an advertisement within the local newspaper. The advertisement stated that a reward of $ 50 will be given to the one who finds it.

What extent scm is applicable to a service operation : MBA670 - Supply Chain Management - Provide a comprehensive explanation of the essential concepts of SCM and explain to what extent SCM is applicable to a service operation such as CII.

Producing the engines : a. GOGO should buy the engines for cost savings of $113 per unit. b. GOGO should continue producing the engines. c. GOGO has relevant costs of greater than $300 a unit and should buy.

Extent of henry exposure : What is the extent of Henry's exposure under the sole proprietorship in the case of a large lawsuit (say, $600,000)?

How truman administration responded to the perceived threat : Using the primary source material in the Revel textbook and the assigned readings listed below, analyze how the Truman administration responded to the perceived threat of communist expansion.

What is the return shareholders are expecting : Risk, Return, and Their Relationship Consider the following annual returns of Estee Lauder and Lowe's Companies:

Compute the present value of the cash flows : Develop a spreadsheet that summarizes this project's cash flow, assuming a four-year useful life after the project is developed. Compute the present value of the cash flows, using an interest rate of 9%.

User Account

All Pages