Grouperman Corporation Currently Manufactures a Subassembly for Its Main Product

question 80

Essay

Grouperman Corporation currently manufactures a subassembly for its main product. The costs per unit are as follows: $$\begin{array} { l r } \text { Direct materials } & \$ 10 \\\text { Direct labor } & 10 \\\text { Variable overhead } & 7 \\\text { Fixed overhead } & \underline { 9 } \\\text { Total } & \underline { \underline { \$ 36 } }\end{array}$$ Fez Company has contacted Grouperman with an offer to sell it 7000 of the subassemblies for $30 each. If Fez makes the subassemblies $4 of the fixed overhead per unit will be allocated to other products.
Instructions
Should Grouperman make or buy the subassemblies? Explain your answer.

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Definitions:

Personal Expertise

The unique skills, knowledge, and experience possessed by an individual in a particular field or area.

Credibility

The quality or state of being believable or trustworthy, often assessed based on past actions, reliability, and integrity.

Central Route

A method of persuasion that involves presenting detailed and argumentative information to promote thoughtful and considered message processing.

Petty and Cacioppo

Researchers known for their elaboration likelihood model of persuasion, which explains how attitudes are formed and changed through different routes of information processing.