Archer, Incorporated, currently manufactures a subcomponent that is used in its main product. A supplier has offered to supply all the
subcomponents needed at a price of $ Archer currently produces subcomponents at the following manufacturing costs:
Required:
a If Archer has no alternative uses for the manufacturing capacity, what would be the profit impact of buying the subcomponents from
the supplier?
b If Archer has no alternative uses for the manufacturing capacity, what would be the maximum price per unit Archer should be willing
to pay the supplier?
c Now assume Archer would avoid $ in equipment leases and salaries if the subcomponent were purchased from the supplier.
Now what would be the profit impact of buying from the supplier?
Complete this question by entering your answers in the tabs below.
Required A
If Archer has no alternative uses for the manufacturing capacity, what would be the profit impact of buying the
subcomponents from the supplier?
