LEMS 6m Micro Devices currently manufactures a subassombly for its main proedust

Question

LEMS 6m Micro Devices currently manufactures a subassombly for its main proedust. The are as follows: t r Direct materials Direct labor Variable overhead Fixed overhead 45.00 35.00 33.00 30.00 Total Crayola Technologies Inc. has contacted Rubium with an offer to sell 6,000 of the subassemblies $135.00 each. Rubium will eliminate $85,000 of fixed overhead if it accepts the proposal b) Should Rubium make or buy the subassemblies? What is the difference between the two alternatives? 2) 9 points Aurous Incorporated planned to use $35 of material per unit but actually used $34 of material per unit, and planned to make 1,500 units but actually made 1,300 units 34 30U

Explanation / Answer

Solution - Make/Buy Decision

Step 1 - Buying Cost

Step 2 - Making cost

Decision - Rubium should make the devices since it will yield the saving of $25000 ($675000 - $650000).

Particulars Units 5000 Buying cost per unit $135 Total Buying cost $675000

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