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Waterways has discovered that a small fitting it now manufactures at...

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Accounting

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Waterways has discovered that a small fitting it now manufactures at a unit cost of $1.00 could be bought elsewhere for $0.81 per unit. Waterways has unit fored manufacturing costs of $0.20 that cannot be eliminated by buying this thit. Watemays needs 446,000 of these units each year: If Waterways decides to buy rather than produce the small fitting. It can devote the machinery and labor to making a timing unit it now buys from another company. Waterways uses approcimately 400 of these units each year. The cost of the unit is $13,28. To aid in the production of this unit. Waterways would need to purchase a new machine at a cost of \$2,356, and the unit cost of produeing the units would be $10.30. (a) Without consldering the possibility of making the timing unit, evaluate whether Waterways should bor or continue to make the: small fiting: The company should the fitting incrementai cost / (savings) will be 5

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