Determine whether it is best for you to continue manufacturing the part or purchase it from the supplier. • Calculate the profit or loss you would have if you accepted the supplier's proposal.

Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Chapter2: The Purchasing Process
Section: Chapter Questions
Problem 1GPE
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The Svenson corporation manufactures cell phones. It manufactures its own circuit boards for cell phones, an important part for the cell phone.
The unit variable cost of raw materials is $180
The variable unit labor cost is $65.
The unit variable cost of indirect costs is $13
Fixed costs are $6,000
The number of parts it manufactures is 700 cell phones in a month.
Morly, an electrical parts supplier, offers to sell you the board for $210 plus freight of $8 per unit.
• Determine whether it is best for you to continue manufacturing the part or purchase it from the supplier.
• Calculate the profit or loss you would have if you accepted the supplier's proposal.

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