Reference no: EM13503069

This company has just revieve a offer from a outside supplier to provide the ink cartridge for this company. at a price of 0.48 per dozen. Bronson inc is interested in this offer because its own production of cartridege is at at capacity. this company estimate that if that if thesupplier offer were accepted; the direct labor and variable manfacture overhead cost of the zippo pen line would reduce by 10 percent and the direct material cost would be reduce by 20 pecent. under present operation this company manufacture all of it own pen from start to finish. the zippo pen are sold thru wholesale at 4 dollar per box. each box contain one dozen pen. fixed manufacture overhead cost charge to the the zippo pen line total 50k per yr. the same equipment and facilties are used to produce serval pen line. the present cost of producing one dozen zippo 1. direct material=1.50 cents direct labor= 1.00 manufacture overhead=0.80 cents total cost = 3.30 cents question 1. should this company accept the outside supplier and why/2. what is the max price that this company should be willing to pay outside supllyier per dozen cartridge and why/ 3.Due to bankruptcy from other compant. Bronson inc expect to sell 150;000 boxes of zippo pen next year. as stated earlier this company has enough to only produce the cartridge 4 only 100,000 box of zippo pen annually.. By adding 30k in fix cost each yr this company could expand its production of cartiage to satisy the demand of zippo pen. the variable cost per unit to produce the additional cartiage should be purchase from the outside supplier and how many should be made by this company. 4. what factor should Bronson inc consider in determined whether it should be make or buy the ink cartiage ; give reason.