256 (275 of 861) CC 6-47 Make or Buy Dana Corporation, based in Toledo, Ohio, is

Question

256 (275 of 861) CC 6-47 Make or Buy Dana Corporation, based in Toledo, Ohio, is a global manufacturer of highly engineered products frequently subcontracts work to other manufacturers occupied. Suppose Dana is about to make some final decisions regarding the use of its manufacturing ustrial, vehicle, construction, commercial, acrospace, and semiconductor markets. It , depending on whether Dana's facilities are fully facilities for the coming year The following are the costs of making part EC113, a key component of an emissions control system: Total Cost for 65,000 Units $ 585,000 715,000 650,000 195,000 Cost per Unit $ 9 Direct materials Direct labor Variable factory overhead Fixed factory overhead Total manufacturing costs 10 $33

Explanation / Answer

ans 1 Relevant cost to make is Direct Material $9 Direct Labor $11 Variable factory overhead $10 Relevant cost to make $30 No. of units $65,000 Total Relevant cost to make 1950000 Relevant Cost to buy is $28+(130000/65000) $30 30*65000 1950000 As the cost is same it is better to make as there is no use of the capacity left. ans 2 Total Relevant cost to make 1950000 Relevant Cost to buy is 1950000-25000 1925000 It is better to buy now b) Total Relevant cost to make 1950000 Relevant Cost to buy is 1950000-15000 1935000 It is better to buy now

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