Crane Manufacturing Company Inc. uses 640 units of Part # 4317 each year in the manufacture of one of its products. The companycurrently produces the part internally, but an outside supplier has offered to provide the part at a price of $100 per part. If Cranechooses to purchase the part from the outside supplier, one third of it's the fixed manufacturing overhead will be eliminated. Thecompany's standard unit cost of producing the part is listed below.Direct materialDirect laborVariable manufacturing overheadFixed manufacturing overheadTotal unit cost$32302933Crane$124Ignoring qualitative factors, should Crane continue to make the parts internally or purchase them from the outside supplier?✓ continue to make the part.

The differential analysis is performed to compare two different alternatives available for business.…

Answered: Crane Manufacturing Company Inc. uses…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 3CMA: Aril Industries is a multiproduct company that currently manufactures 30,000 units of Part 730 each...

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