For Many Years, Condor Company Has Produced a Small Part

question 51

Essay

For many years, Condor Company has produced a small part that it uses in the production of its standard line of equipment. The company's cost of producing one part, based on a production level of 50 000 parts per year, is:
An outside supplier has offered to supply the part to Condor for $29 per part. Condor has determined that 40% of the fixed overhead represents salaries and other costs which can be eliminated if the parts are purchased.
Required:
Prepare an analysis to determine whether Condor should accept the supplier's offer.

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Definitions:

Slope

In mathematics, a measurement of the steepness, incline, or grade of a line, typically expressed as a ratio of vertical change to horizontal change.

Value

The importance or utility that something has for an individual or the market price of a good or service.

Horizontal Axis

In graphing, this is the x-axis, which typically represents the independent variable.

Vertical Axis

In a graph or chart, the vertical line or scale along which numerical data is plotted or measured, usually representing quantities.