Business, 12.03.2021 15:00, lagarde

Junior Company currently buys 40,000 units of a part used to manufacture its product at $40 per unit. Recently the supplier informed Junior Company that a 20% increase will take effect next year. Junior has some additional space and could produce the units for the following per-unit costs (based on 40,000 units): Direct materials $10 Direct labor 12 Variable overhead 10 Fixed overhead 5 Total $37 If the units are purchased from the supplier, $200,000 of fixed costs will continue to be incurred. In addition, the plant can be rented out for $22,000 per year if the parts are purchased externally. Required: Should Junior Company buy the part externally or make it internally

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Junior Company currently buys 40,000 units of a part used to manufacture its product at $40 per unit...