Zahrt Company manufactures a part for its production cycle. The costs per unit for 10,000 units of this part are as follows: The Company has been approached by a supplier who claims it can sell Zahrt 10,000 units of the same part for $840,000.
Required:
a. Assuming there is no alternative use for the facilities, should Zahrt buy the part, and if so, how much money would be saved?
b. Assuming the facilities can be rented out for $110,000 per year, should Zahrt buy the part, and if so, how much money would be saved?

Question

Zahrt Company manufactures a part for its production cycle. The costs per unit for 10,000 units of this part are as follows:  The Company has been approached by a supplier who claims it can sell Zahrt 10,000 units of the same part for $840,000.
Required:
a. Assuming there is no alternative use for the facilities, should Zahrt buy the part, and if so, how much money would be saved?
b. Assuming the facilities can be rented out for $110,000 per year, should Zahrt buy the part, and if so, how much money would be saved?

Quizplus · Accepted Answer

The Answer of Zahrt Company manufactures a part for its production cycle. The costs per unit for 10,000 units of this part are as follows:  The Company has been approached by a supplier who claims it can sell Zahrt 10,000 units of the same part for $840,000.
Required:
a. Assuming there is no alternative use for the facilities, should Zahrt buy the part, and if so, how much money would be saved?
b. Assuming the facilities can be rented out for $110,000 per year, should Zahrt buy the part, and if so, how much money would be saved?

Zahrt Company Manufactures a Part for Its Production Cycle