Business, 02.12.2021 01:00, 10040816

Alanco, Inc. manufactures a variety of products and is currently manufacturing all of their own component parts. An outside supplier has offered to sell one of those components to Alanco. To evaluate this offer, the following information has been gathered relating to the cost of producing the component internally: Direct Materials $4
Direct Labor $6
Variable Manufacturing Overhead $2
Fix Manufacturing Overhead, Traceable* $5
Fix Manufacturing Overhead, Common but Allocated $8
Total Cost $25.00
Supplier Price = $21
Units Per Year = 12,000

Fix manufacturing overhead, traceable is composed of two items:

Depreciation of Equipment: 30%
Supervisor Salary: 70%

Assuming the company has no alternative use for the facilities now being used to produce the component, complete the following analysis to determine if the outside supplier's offer should be accepted.

Required:
Based on this analysis, write an if statement to determine if Alanco should make or buy the component.

Answers: 1

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Alanco, Inc. manufactures a variety of products and is currently manufacturing all of their own comp...