Solution-Should cedarwood continue to make or should they

Should cedarwood continue to make or should they buy

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Reference no: EM133168848

Question - Make or Buy - CedarWood Industries must decide whether to make or buy tree clamps. The costs of producing 60,000 clamps are as follows:

Direct materials - $65,000

Direct labour - $42,000

Variable overhead - $45,000

Fixed overhead - $60,000

The average cost to make 1 clamp is $2.95 and the company has been offered a price per clamp of $2.75 to buy them.

If they buy the clamps, all variable costs will be eliminated and 50% of the fixed costs will be eliminated.

Should CedarWood continue to make or should they buy the clamps? Show all your work and clearly state MAKE or BUY in your answer.

Reference no: EM133168848

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Should cedarwood continue to make or should they buy

Reference no: EM133168848

Reference no: EM133168848

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