Mohave Corporation is considering outsourcing production of the umbrella tote bag included with some of...
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Mohave Corporation is considering outsourcing production of the umbrella tote bag included with some of its products. The company has recelved a bid from a supplier in Vietnam to produce 8,200 units per year for $9.50 each Mohave the following information about the cost of producing tote bags: Mohave determined all variable costs could be eliminated by outsourang the tote bags. While 60 percent of the fixed overhead cost is unavoidable. At this time, Mohave has no specific use in mind for the space currently dedicated to producing the tote bags Required: 1. Compute the difference in cost between making and buying the umbrella tote bag. 2. Based strictly on the incremental analysis, should Mohave buy the tote bags or continue to make them? 3-0. Suppose the space Mohave currently uses to make the bags could be utlized by a new product line that would generate $10,000 in annual pronts. Recompute the difference in cost between making and buying the umbrelia tote bag: 3-b. Does this change your recommendation to Mohave? Complete this question by entering your answers in the tabs below. Compute the difference in cost between making and buying the umbrella tote bag
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