Jordan Company Manufactures a Part for Its Production Cycle The Jordan Company Has Been Approached by a Supplier Who

question 16

Essay

Jordan Company manufactures a part for its production cycle. The costs per unit for 20,000 units of this part are as follows: $$\begin{array} { l l } \text { Direct materials } & \$ 15 \\\text { Direct labor } & 12 \\\text { Variable factory overhead } & 20 \\\text { Unavoidable fixed factory overhead } & \underline { 18 } \\\text { Total cost } & \underline { \$ 65 }\end{array}$$ The Jordan Company has been approached by a supplier who claims it can sell Jordan Company 20,000 units of the same part for $940,000.
Required:
a. Assuming there is no alternative use for the facilities, how much money would Jordan Company save by buying the part?
b. Assuming the facilities can be rented out for $10,000 per year, should Jordan Company buy the part, and if so, how much money would be saved?
c. Are there any other factors Jordan Company should consider?

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Definitions:

Long-Distance Relationships

Romantic relationships in which the partners are geographically separated from each other, necessitating communication through electronic means or mail.

Impact Factors

A measure reflecting the yearly average number of citations to recent articles published in a specific journal.

Deceptive

Involving or characterized by trickery or dishonesty.

Reasons For Deception

involves motivations behind misleading or providing false information to others, which can include protecting oneself, avoiding conflict, or manipulating situations for personal gain.