Make or Buy Terry Incorporated manufactures machine parts for aircraft engines. CEO Bucky Walters is...
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Make or Buy Terry Incorporated manufactures machine parts for aircraft engines. CEO Bucky Walters is considering an offer from a subcontractor to provide 2,400 units of product OP89 for $201,600. If Terry does not purchase these parts from the subcontractor, it must continue to produce them in-house with these costs: Required: 1. What is the relevant cost per unit to make the product internally? 2. What is the estimated increase or decrease in short-term operating profit of producing the product internally versus purchasing the product from a supplier? Complete this question by entering your answers in the tabs below. What is the relevant cost per unit to make the product intemally? Asset Replacement An uninsured boat costing $91,600 was wrecked the first day it was used. It can be either sold as-is for $9,160 cash and replaced with a similar boat costing $94,400 or rebulit for $76,600 and be brand new as far as operating characteristics and looks are concerned. Required: What is the difference in cost between the two options? Based on financial considerations, what should the company do? Sell as-is for $9,160 cash and replace with a similar boat costing $94,400. Rebulld for $76,600
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