QUESTION 3 Senior Company currently buys 30,000 units of a part used to manufacture its product at $40 per unit. Recentl

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Question 3 Senior Company Currently Buys 30 000 Units Of A Part Used To Manufacture Its Product At 40 Per Unit Recentl 1 (52.52 KiB) Viewed 35 times

QUESTION 3 Senior Company currently buys 30,000 units of a part used to manufacture its product at $40 per unit. Recently the supplier informed Senior Company that a 20% increase will take effect next year. Senior has some additional space and could produce the units for the following per-unit costs (based on 30,000 units): Direct materials SIG Direct labour 12 Variable overhead 12 Fixed overhead Total 10 If the units are purchased from the supplier, $200,000 of fixed costs will continue to be incurred. In addition, the plant can be rented out for $20,000 per year if the parts are purchased externally. Required: Should Senior Company buy the part externally or make it internally? (30 marks)