EXERCISE 2 Scooter, Ltd., currently manufactures Part XR-15 in its factory. The manufacturing cost has...
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EXERCISE 2 Scooter, Ltd., currently manufactures Part XR-15 in its factory. The manufacturing cost has been calculated as follows: Materials, $22.50; Labor, $2.50; and Overhead, $17.50. Overhead is 40% variable and is applied at 700% of labor costs. An outside supplier has bid a price of $35 to supply all of Scooter's needs of XR-15 for the next three years. Scooter currently makes 750 parts per month. Required: 1. Assume that Scooter has no alternative use for the space or machinery currently used in the manufacturing of XR-15. Should Scooter make the part or buy it from the outside supplier? 2. Assume that Scooter could use the space to store materials that are currently stored in leased space. The leased space costs $3,000 per month. What should Scooter do
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