Marc Company assembles products from a group of interconnecting 1 answer below »
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Marc Company assembles products from a group of interconnecting parts. The company produces some of the parts and buys some from outside vendors. The vendor for Part X has just increased its price by 35 percent, to $10 per unit for the first 5,000 units and $9 per additional unit ordered each year. The company uses 7,500 units of Part X each year. Unit costs if the company makes the part are as follows:
Direct materials…………………………………………….$3.50
Direct labor………………………………………………… 2.00
Variable overhead…………………………………………. 4.00
Variable selling costs for the assembled product ………… 3.75
Should Marc continue to purchase Part X or begin making it?
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