Guillory Company produces a part that has the following costs per unit: Homeland Corporation can provide the part to Guillory for $23 per unit.Guillory Company has determined that 50 percent of its fixed overhead would continue if it purchased the part.However,if Guillory no longer produces the part,it can rent that portion of the plant facilities for $70,000 per year.Guillory Company currently produces 12,000 parts per year.Which alternative is preferable and by what margin?
A)Make-$24,000
B)Make-$60,000
C)Buy-$10,000
D)Buy-$46,000

Question

Guillory Company produces a part that has the following costs per unit:  Homeland Corporation can provide the part to Guillory for $23 per unit.Guillory Company has determined that 50 percent of its fixed overhead would continue if it purchased the part.However,if Guillory no longer produces the part,it can rent that portion of the plant facilities for $70,000 per year.Guillory Company currently produces 12,000 parts per year.Which alternative is preferable and by what margin?
A)Make-$24,000 
B)Make-$60,000 
C)Buy-$10,000 
D)Buy-$46,000

Quizplus · Accepted Answer

The Answer of Guillory Company produces a part that has the following costs per unit:  Homeland Corporation can provide the part to Guillory for $23 per unit.Guillory Company has determined that 50 percent of its fixed overhead would continue if it purchased the part.However,if Guillory no longer produces the part,it can rent that portion of the plant facilities for $70,000 per year.Guillory Company currently produces 12,000 parts per year.Which alternative is preferable and by what margin?
A)Make-$24,000 
B)Make-$60,000 
C)Buy-$10,000 
D)Buy-$46,000

Guillory Company Produces a Part That Has the Following Costs