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Should company make or buy if vacated facilities left idle

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Reference no: EM132583083

A vendor has offered to supply a component for $38 (FOB destination) that has previously been manufactured internally.

Per unit

DM $18

DL 6

Variable overhead 3

Fixed Overhead 4

Total cost $31

Question 1: Suppose fixed costs cannot be avoided if the component is purchased from outside. Should the company make or buy if the vacated facilities are:

a. left idle?

Reference no: EM132583083

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