Robinson Company is evaluating the make or buy decision in regard to making the wheels...
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Robinson Company is evaluating the make or buy decision in regard to making the wheels for its skateboards internally. The currently manufactured wheels have a variable unit cost of $3. Fixed costs are $20,000 per month, however, 25% can be eliminated if wheels are no longer produced. A supplier has offered to produce this part for $4 per wheel and can produce the 4,000 wheels for the 1000 skateboards needed monthly. Should Robinson outsource wheels or make them internally?
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