Part 6 Make or Buy Decisions [E6-3 adapted) (25 points) EKAH Company makes motors. The...
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Part 6 Make or Buy Decisions [E6-3 adapted) (25 points) EKAH Company makes motors. The company has always produced all the parts for its motors, including the "distribution gear". An outside supplier has offered to sell the "distribution gear" for a cost of $33 per unit. To evaluate this offer, EKAH wishes you to consider the following cost information currently used for producing one unit of the "distribution gear" by EKAH Company: $ 12 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead, traceable Fixed manufacturing overhead, allocated 6 see note Total cost considered $ 48 * Note: $2 per unit for supervisor's salary: $4 per unit depreciation of special equipment (no resale value) There is no alternative use of the production space used in making the distribution gear". Required Explain whether the supplier's offer should be accepted. Show calculations
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