Robbins Co. has been producing a part for a camera they manufacture. The costs for this part are as follows:
$$\begin{array} { | l | c | }
\hline \text { Fixed costs } & \$ 392,000 \
\hline \text { Total variable costs } & \$ 112,000 \
\hline \text { Units produced } & 28,000 \
\hline
\end{array}$$
Robbins has an opportunity to purchase this part rather than manufacture it. To purchase the part will cost $3 a unit. If the part is purchased, fixed costs will be reduced by 20%.
Should Robbins Co. make or buy this part. Show how you arrived at your decision.

Question

Robbins Co. has been producing a part for a camera they manufacture. The costs for this part are as follows:
$$\begin{array} { | l | c | } 
\hline \text { Fixed costs } & \$ 392,000 \
\hline \text { Total variable costs } & \$ 112,000 \
\hline \text { Units produced } & 28,000 \
\hline
\end{array}$$
Robbins has an opportunity to purchase this part rather than manufacture it. To purchase the part will cost $3 a unit. If the part is purchased, fixed costs will be reduced by 20%.
Should Robbins Co. make or buy this part. Show how you arrived at your decision.

Quizplus · Accepted Answer

The Answer of Robbins Co. has been producing a part for a camera they manufacture. The costs for this part are as follows:
$$\begin{array} { | l | c | } 
\hline \text { Fixed costs } & \$ 392,000 \
\hline \text { Total variable costs } & \$ 112,000 \
\hline \text { Units produced } & 28,000 \
\hline
\end{array}$$
Robbins has an opportunity to purchase this part rather than manufacture it. To purchase the part will cost $3 a unit. If the part is purchased, fixed costs will be reduced by 20%.
Should Robbins Co. make or buy this part. Show how you arrived at your decision.

Robbins Co Robbins Has an Opportunity to Purchase This Part Rather Than