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Veronika [31]
3 years ago
10

The Southern Bell Company manufactures 2,000 telephones per year. The full manufacturing costs per telephone are as follows:

Business
1 answer:
Degger [83]3 years ago
5 0

Answer:

The company should buy the units because it will save $10,000.-

Explanation:

Giving the following information:

Make in-house:

Unitary variable cost= 2 + 8 + 6= $16

Avoidable fixed cost= $8,000

Buy:

Unitary cost= $15

<u>First, we will determine the total cost of each option:</u>

Make in house= 2,000*16 + 8,000= $40,000

Buy= 15*2,000= $30,000

The company should buy the units because it will save $10,000.-

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