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:

Health

A state of complete physical and mental or social well-being.

Well-Being

A state of being comfortable, healthy, or happy, encompassing physical, mental, and emotional health.

Chemical Additives

Substances added to products to enhance or preserve their properties, such as flavor, color, or shelf life.

Shelf Life

That length of time that sterile items are given before they are considered unsuitable for maintaining sterility.