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Should Thunder make or buy the part and why

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Reference no: EM132757018

Question - Thunder Company has been producing 15000 units of part 3741 for its products. The unit cost for the part is as follows:

Direct materials 7

Direct Labour 13

Variable manufacturing overhead 9

Fixed manufacturing overhead 10

Total 39

Thunder can purchase 15000 units of part 3741 for $ 34 each. If the part is purchased, Thunder can make another product and provide a contribution margin of $15000. If the part is purchased, 75% of the fixed manufacturing overhead costs will still be incurred. Should Thunder make or buy the part and why?

Reference no: EM132757018

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