90.2K

Verified Solution

Link Copied!

MSI is considering outsourcing the production of the handheld control module used with some of its products. The company has received a bid from Monte Legend Co. (MLC) to produce 18,000 units of the module per year for $25.00 each. The following information pertains to MSIs production of the control modules:

MSI is considering outsourcing the production of the handheld control module used with some of its products. The company has received a bid from Monte Legend Co. (MLC) to produce 18,000 units of the module per year for $25.00 each. The following information pertains to MSI's production of the control modules $10 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost per unit 7 $28 MSI has determined that it could eliminate all variable costs if the control modules were produced externally, but none of the fixed overhead is available. At this time, MSI has no specific use in mind for the space that is currently dedicated to the control module production Required: 1. Compute the difference in cost between making and buying the control modulo Citterende in Cost 2. Should MSI buy the modules from MLC or continue to make them? O Buy Make - MacBook Air og So FO - + 2. Should MSI buy the modules from MIC or continue to make them? Buy Make 3-a. Suppose that the MSI space currently used for the modules could be utilized by a new product line that would generate $28,000 in annual profit Recompute the erence in cost between making and buying under this scenario Dance in Cost Mgmt 3-b. Does this change your recommendation to MSI? Yos MacBook Air 30 da F 25 # S % A &

Answer & Explanation Solved by verified expert

See Answer