Southwestern Company Needs 1,000 Motors in Its Manufacture of Automobiles

question 199

Essay

Southwestern Company needs 1,000 motors in its manufacture of automobiles.It can buy the motors from Jinx Motors for $1,250 each.Southwestern's plant can manufacture the motors for the following costs per unit:
$\begin{array}{lr}\text { Direct materials } & \$ 500 \\\text { Direct manufacturing labor } & 250 \\\text { Variable manufacturing overhead } & 200 \\\text { Fixed manufacturing overhead } & 350 \\\quad \text { Total } & \$ 1,300\end{array}$ If Southwestern buys the motors from Jinx,70% of the fixed manufacturing overhead applied will not be avoided.
Required:
a.Should the company make or buy the motors?
b.What additional factors should Southwestern consider in deciding whether or NOT to make or buy the motors?

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Definitions:

Social Benefits

Advantages provided by society to its members, such as healthcare, education, and welfare.

Genocide

The deliberate and systematic extermination of a national, racial, political, or cultural group.

Social Group

A collection of individuals who interact with each other, share similar characteristics, and collectively have a sense of unity.

Canada

A country located in the northern part of North America, known for its vast landscapes, multicultural diversity, and being the second-largest country by total area.