The Srane Company has contacted Trell with an offer to sell it 5,000 wickets for

Question

The Srane Company has contacted Trell with an offer to sell it 5,000 wickets for $36 each. If Trell makes the wickets, variable costs are $22 per unit. Fixed costs are $16 per unit; however, $10 per unit is unavoidable. Should Trell make or buy the wickets? Question 35 options: Buy; savings is $20,000. Make; savings is $40,000. Buy; savings is $50,000. Make; savings is $20,000. The Srane Company has contacted Trell with an offer to sell it 5,000 wickets for $36 each. If Trell makes the wickets, variable costs are $22 per unit. Fixed costs are $16 per unit; however, $10 per unit is unavoidable. Should Trell make or buy the wickets? The Srane Company has contacted Trell with an offer to sell it 5,000 wickets for $36 each. If Trell makes the wickets, variable costs are $22 per unit. Fixed costs are $16 per unit; however, $10 per unit is unavoidable. Should Trell make or buy the wickets? Buy; savings is $20,000. Make; savings is $40,000. Buy; savings is $50,000. Make; savings is $20,000. Buy; savings is $20,000. Make; savings is $40,000. Buy; savings is $50,000. Make; savings is $20,000. Buy; savings is $20,000. Make; savings is $40,000. Buy; savings is $50,000. Make; savings is $20,000.

Explanation / Answer

Hi,

If Srane Buys

Total Cost = 5000*36 = 180000

If Srane Makes

Total Cost = 5000*22 + 5000*10 = 160000

Srane should make as it results in 20000 savings.

Option D is correct.

Thanks.

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