What is the maximum amount per unit that Watanabe would be willing to pay to an outside supplier?


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What is the maximum amount per unit that Watanabe would be willing to pay to an outside supplier? 1 answer below » M AKE – OR -B UY , F UNCTIONAL -B ASED A NALYSIS Watanabe Company is currently manufacturing Part NIM-06, producing 15,000 units annually. The part is used in the production of several products made by Watanabe. The cost per unit for NIM-06 is as follows: Direct materials $70.00 Direct labor 20.00 Variable overhead 3.00 Fixed overhead 1.50 Total $94.50 Of the total fixed overhead assigned to NIM-06, $12,000 is direct fixed overhead (the annual lease cost of machinery used to manufacture Part NIM-06), and the remainder is common View complete question » M AKE – OR -B UY , F UNCTIONAL -B ASED A NALYSIS Watanabe Company is currently manufacturing Part NIM-06, producing 15,000 units annually. The part is used in the production of several products made by Watanabe. The cost per unit for NIM-06 is as follows: Direct materials $70.00 Direct labor 20.00 Variable overhead 3.00 Fixed overhead 1.50 Total $94.50 Of the total fixed overhead assigned to NIM-06, $12,000 is direct fixed overhead (the annual lease cost of machinery used to manufacture Part NIM-06), and the remainder is common fixed overhead. An outside supplier has offered to sell the part to Watanabe for $94. There is no alternative use for the facilities currently used to produce the part. No significant non-unit-based overhead costs are incurred. Required: 1. Should Watanabe Company make or buy Part NIM-06? 2. What is the maximum amount per unit that Watanabe would be willing to pay to an outside supplier? View less » Jul 24 2014 07:51 AM

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