Done 6. (6 pts) A Texas company manufactures all the parts for their primary pro

Question

Done 6. (6 pts) A Texas company manufactures all the parts for their primary product, then assembles and sell the product. It recemtly received an offer from a company in Califormia to make one of their parts for their product. The CA company is willing to sell the part for $30)part To continue making the part, the Texas company will need to purchase and replace a production (the old one is no longer economically viable and has zero salvage value) at a cost of estimate it will last for another 5 years. The straight line depreciation of the ew They estimate the need 20Karts over the nest five yeas (AK/yT) The Texas company has the following cost data on the part: Direct Material Direct Labor Variable Overhead Cost part $12 58 $3 Supervision Rent if they buy the part a supeviser would ao ed The ren chi aed on he allocated space in their manufacturing facility for the manufacture of the part, but there is already excess plant space. The rent for it is $25Kyr and will have to be paid regardiess. Should the part be made intermally or parchased from the CA company?

Explanation / Answer

Answer-

If Part s should be purchased from ca company then cost per unit

If Parts is not purchased And made internally then cost

It is advisable for the company to manufacture of parts instead of purchasing from ca company.

Particulars Amount Purchasing Price $30 Depreciation per unit($60000/4000) $15 Total $45

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