Reference no: EM132798215

Question - Sun Company is thinking of buying from an outsider supplier a part it needs in its manufacturing process. Currently the company is making the part internally. The relevant cost per part of making the part is $23 (excluding any opportunity cost). It needs 750 parts per month and could buy these from the outside supplier at $27 per part. If it buys the part from the outside supplier it could rent out the factory space currently being used to make the part for $2,500 per month.

Required -

A. Give the dollar amount of the total opportunity cost (per month) of making the part internally.

B. Should the part be purchased from the outside supplier?