Coyle Company Manufactured 6,000 Units of a Component Part That

question 110

Essay

Coyle Company manufactured 6,000 units of a component part that is used in its product and incurred the following costs:
Another company has offered to sell the same component part to the company for $12 per unit. The fixed manufacturing overhead consists mainly of depreciation on the equipment used to manufacture the part and would not be reduced if the component part was purchased from the outside firm. If the component part is purchased from the outside firm, Coyle Company has the opportunity to use the factory equipment to produce another product which is estimated to have a contribution margin of $14,000.
Instructions
Prepare an incremental analysis report for Coyle Company which can serve as informational input into this make or buy decision.

---

Definitions:

Duplex Mind

A concept denoting the existence of two systems within the human mind: one that is fast and automatic, and another that is slow and deliberative.

Deliberate System

A cognitive process that is slow, analytical, and effortful, often associated with rational decision-making.

Automatic System

Cognitive processing that occurs subconsciously and effortlessly, often responsible for quick judgments and reactions.

Automatic System

An unconscious, fast, and often involuntary process of information processing in the brain, which contrasts with deliberate and effortful processing.