Business, 11.05.2021 20:50 sherlock19

Cube Manufacturing usually produces its own parts for assembly. The following monthly data are available for one of the parts, Part A31: Manufacturing costs
Variable per unit $6
Fixed costs 15,000
Nonmanufacturing costs
Variable per unit 1
Fixed costs 9,000

Cube needs 2,000 units of Part A31 every month. An outside supplier offers to deliver that part for $11.50 each. By accepting the offer, Cube can save half of the fixed manufacturing costs and all variable costs, but the fixed nonmanufacturing costs are not affected.

Required:
a. Should Cube Manufacturing accept the offer and outsource Part A31?
b. If the facility used to produce Part A31 can be leased out to generate a monthly rental income of $3,000, what should Cube Manufacturing do? Why?

Answers: 2

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Cube Manufacturing usually produces its own parts for assembly. The following monthly data are avail...

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