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Junior Company currently buys 30,000 units of a part used to manufacture its product at £40 per unit. Recently the supplier informed Junior Company that a 20 per cent increase will take effect next year. Junior has some additional space and could produce the units for the following per-unit costs (based on 30,000 units): If the units are purchased from the supplier, £200,000 of fixed costs will continue to be incurred. In addition, the plant can be rented out for £20,000 per year if the parts are purchased externally.
Required:
Should Junior Company buy the part externally or make it internally?
Tenancy In Common
A form of co-ownership of property in which each party owns an undivided interest that passes to his or her heirs at death.
Real Property
Land and anything permanently attached to it, such as buildings and structures, differentiated from personal property which can be moved.
Personal Property
refers to movable items owned by an individual or corporation, excluding real estate.
Real Property
Refers to land and any permanent structures attached to it, such as buildings or houses.
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