Answer the following question(s) using the information below.
Schmidt Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows:
Of the fixed factory overhead costs, $30,000 is avoidable.
-Lynn Valley Corporation currently manufactures a subassembly for its main product. The costs per unit are as follows: Reliance Corp has contacted Lynn Valley with an offer to sell them 5,000 of the subassemblies for $44.00 each. Lynn Valley will eliminate $50,000 of fixed overhead if it accepts the proposal.
Should Omark make or buy the subassemblies? What is the difference between the two alternatives?
A) buy; savings = $20,000
B) buy; savings = $50,000
C) make; savings = $60,000
D) make; savings = $10,000
E) buy; savings = $10,000

Question

Answer the following question(s) using the information below.
Schmidt Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows:
  Of the fixed factory overhead costs, $30,000 is avoidable.
-Lynn Valley Corporation currently manufactures a subassembly for its main product. The costs per unit are as follows:  Reliance Corp has contacted Lynn Valley with an offer to sell them 5,000 of the subassemblies for $44.00 each. Lynn Valley will eliminate $50,000 of fixed overhead if it accepts the proposal.
Should Omark make or buy the subassemblies? What is the difference between the two alternatives?
A) buy; savings = $20,000 
B) buy; savings = $50,000 
C) make; savings = $60,000 
D) make; savings = $10,000 
E) buy; savings = $10,000

Quizplus · Accepted Answer

The Answer of Answer the following question(s) using the information below.
Schmidt Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows:
  Of the fixed factory overhead costs, $30,000 is avoidable.
-Lynn Valley Corporation currently manufactures a subassembly for its main product. The costs per unit are as follows:  Reliance Corp has contacted Lynn Valley with an offer to sell them 5,000 of the subassemblies for $44.00 each. Lynn Valley will eliminate $50,000 of fixed overhead if it accepts the proposal.
Should Omark make or buy the subassemblies? What is the difference between the two alternatives?
A) buy; savings = $20,000 
B) buy; savings = $50,000 
C) make; savings = $60,000 
D) make; savings = $10,000 
E) buy; savings = $10,000

Answer the Following Question(s) Using the Information Below