Wykle Company Purchases 10,000 Units of a Part That It

question 23

Essay

Wykle Company purchases 10,000 units of a part that it needs for production of its product. Notification has just been received from the supplier that a price increase will take effect shortly which will bring the price of each part to $30. Wykle is considering using some idle facilities to produce the part. The production costs to produce the needed 10,000 parts are as follows: The idle facilities could also be rented out at an annual rent of $36,000. All the factory overhead costs are avoidable.
Required: Determine if Wykle should continue to buy the part or produce it in house.

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Definitions:

Service Charges

Fees charged by service providers for the services they offer, which can include monthly fees, transaction fees, or specific service-related fees.

Reconcile Window

A feature in accounting software that helps in comparing internal financial records with bank statements to ensure accuracy.

Insurance

A financial product sold by insurance companies to safeguard against the risk of financial loss, covering various aspects such as health, property, and liability.

Check Register

A record of checks written, deposits made, and balances in a checking account, helping track financial transactions.