The Hershey Kayak Making Co. is considering whether or not to make a key part for one of its kayak models. Its projected total requirement for the part is 15,000 units, and a trusted supplier can make the part for $25 per unit. Donald Biden, the owner, estimates that the purchase contract will cost $250 to prepare, and if Pearson made the part in-house, an additional investment in equipment would cost $30,000; the variable cost for the part would be $14 per unit. Help Donald to determine the cost of buying.
The Hershey Kayak Making Co. is considering whether or not to make a key part for one of its kayak models. Its projected total requirement for the part is 15,000 units, and a trusted supplier can make the part for $25 per unit. Donald Biden, the owner, estimates that the purchase contract will cost $250 to prepare, and if Pearson made the part in-house, an additional investment in equipment would cost $30,000; the variable cost for the part would be $14 per unit. Help Donald to determine the cost of buying.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Hershey Kayak Making Co. is considering whether or not to make a key part for one of its kayak models. Its projected total requirement for the part is 15,000 units, and a trusted supplier can make the part for $25 per unit. Donald Biden, the owner, estimates that the purchase contract will cost $250 to prepare, and if Pearson made the part in-house, an additional investment in equipment would cost $30,000; the variable cost for the part would be $14 per unit. Help Donald to determine the cost of buying.
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