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Winston Company_Incremental analysis

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Question;WinstonCompanymanufactured5,000 unitsofacomponentpartthatisused in;itsproductand incurredthe followingcosts;Directmaterials;35,000;Directlabor;25,000;Variablemanufacturingoverhead;20,000;Fixedmanufacturingoverhead;18,000;98,000;Anothercompanyhasofferedtosellthesamecomponenttothecompanyfor$17.50;per;unit.The?xed;manufacturingoverheadconsists;mainlyofdepreciationonequipmentused;to;manufacturethepartand;wouldnotbereduced;ifthecomponentpartwaspurchasedfromtheoutside?rm.If;thecomponentpart is purchasedfromtheoutside?rm, WinstonCompanyhastheopportunitytouse;the;factoryequipment;toproduce;anotherproductthatisestimatedtohaveacontributionmarginof$19,000;Instructions;Prepareanincrementalanalysisforthismakeorbuydecision.Shouldthecomponentbe;madeor purchased?

 

Paper#44599 | Written in 18-Jul-2015

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