Victoria Technologies Makes a Part Used in the Manufacture of Digital

question 179

Essay

Victoria Technologies makes a part used in the manufacture of digital cameras. Management is
considering whether to continue manufacturing the part, or to buy the part from an outside source at a cost of $24.00 per part. Victoria Technologies needs 60,000 parts per year. The cost of manufacturing 60,000 parts is computed as follows:

If Victoria Technologies buys the part, it would pay $.60 per unit to transport the parts to its manufacturing plant. Purchasing the part from an outside source would enable the company to avoid 50% of fixed manufacturing overhead costs. Victoria Technologies' factory space freed up by purchasing the part from an outside supplier could be used to manufacture another product with a contribution margin of $70,000.
Prepare an analysis to show which alternative makes the best use of Victoria Technologies' factory space:1)Make the part
2)Buy the part and leave facilities idle
3)Buy the part and use facilities to make another product

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Definitions:

Legitimizing Myths

Explanations used to justify why people in power deserve to be in power.

Self-Interest

The consideration of one's own advantages or well-being above those of others or the collective.

Vision

The faculty or state of being able to see, as well as the perception of the environment and the ability to interpret the surrounding visuals.

Leisure

refers to free time spent away from business, work, domestic chores, and education, as well as necessary activities such as eating and sleeping.