Brian Company Manufactures a Part for Its Production Cycle

question 44

Essay

Brian Company manufactures a part for its production cycle.The annual costs per unit for 20,000 units of this part are as follows:
Brian Company has been approached by a supplier who will sell 20,000 units of the same part for $940,000.All the fixed indirect production costs are unavoidable if Brian Company ceases production of the part.
Required:
A)Assuming there is no alternative use for the facilities,should Brian Company buy or make the part?
B)Assume the facilities can be rented out for $100,000 per year.Should Brian Company buy the part? If so,how much money will be saved?

• A)Assuming there is no alternative use for the facilities,should Brian Company buy or make the part?
• B)Assume the facilities can be rented out for $100,000 per year.Should Brian Company buy the part? If so,how much money will be saved?

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Definitions:

Scales of Measurement

Refers to the methods used to categorize and quantify variables in research, such as nominal, ordinal, interval, and ratio scales.

Descriptive Statistics

Statistical methods that summarize and describe the characteristics of a dataset, such as mean, median, and standard deviation.

Inferential Statistics

A branch of statistics that allows us to make predictions or inferences about a population based on a sample of data.

Characteristics

Characteristics are distinguishing traits, qualities, or properties that identify and differentiate individuals, groups, or things.