Reference no: EM132807984

Stretch Inc. manufactures the elastic band that becomes the waistline in a pair of yoga pants. The manufacturing costs for the elastic band alone are presented below. Stretch Inc. receives an offer from Namaste to supply the elastic band for $10 each. If Stretch purchases the elastic band from Namaste, the elastic band manufacturing facility will remain idle.

1) an analysis to determine whether Stretch should purchase the elastic band from Namaste.

2) Then explain any non-financial factors that might influence their decision.

Direct Materials: $3
Direct Labor: 2
Variable Manufacturing Overhead: 3
Variable Selling Expense: 1
Fixed Manufacturing Overhead: 8
Total Cost: $17

Analysis Make Buy

Purchase Price:
Direct Materials:
Direct Labor:
Variable Manufacturing Overhead:
Variable Selling Expense:
Fixed Manufacturing Overhead:
Total Cost:

Problem 1: Should the company make or buy the elastic band?

Problem 2: Explain any non-financial factors that might influence the decision in this case.