Archer currently manufactures a subcomponent that is used in its main product.A supplier has offered to supply all the subcomponents needed at a price of $42.Archer currently produces 100,000 subcomponents at the following manufacturing costs:
a.If Archer has no alternative uses for the manufacturing capacity,what would be the profit impact of buying the subcomponents from the supplier?
b.If Archer has no alternative uses for the manufacturing capacity,what would be the maximum price per unit they would be willing to pay the supplier?
c.Now assume Archer would avoid $150,000 in equipment leases and salaries if the subcomponent were purchased from the supplier.Now what would be the profit impact of buying from the supplier?
Definitions:
Q22: Spice Company has two divisions,Parsley and Sage.Parsley
Q28: Olive Corp.currently makes 20,000 subcomponents a year
Q38: The Walnut Division of Benton Corp.has average
Q38: _ are the specific actions managers use
Q41: When managers make a decision,they base it
Q47: In deciding whether to eliminate a business
Q48: Howard has an ROI of 16% based
Q56: Devon Inc.has a profit margin of 12%
Q79: Last month Dexter Company had a $15,000
Q129: Hamilton,Inc.has two divisions,Parker and Blaine.Following is the