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:

Permissive

A parenting style characterized by low demands with high responsiveness, where children are allowed considerable self-regulation.

Indulgent

A parenting style characterized by permissiveness and high levels of warmth and responsiveness, but low levels of discipline or expectations.

Authoritarian

Describes a governing or parenting style characterized by strict adherence to rules, high expectations, and minimal feedback or warmth towards subordinates or children.

Survival Goal

An objective focused on persevering life and meeting basic needs in both animals and humans.