Alanco, Incorporated manufactures a variety of products and is currently manufacturing all of its own...
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Accounting
Alanco, Incorporated manufactures a variety of products and is currently manufacturing all of its own component parts. An outside supplier has offered to sell one of those components to Alanco. The Controller has asked you to help evaluate this offer to determine if the company should make or buy the component.
Direct materials $
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead, traceable
Fixed manufacturing overhead, common but allocated
Total cost $
Supplier price $
Units used per year
The fixed manufacturing overhead, traceable
Depreciation of equipment no resale value
Supervisor salary
Required:
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.
Based on this analysis, determine if Alanco should make or buy the component.
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