Xyon company purchases 10,000 pumps annually from Kobec inc because the price ke
ID: 2373766 • Letter: X
Question
Xyon company purchases 10,000 pumps annually from Kobec inc because the price keep increasing and reached $ 88 per unit last year, Xyon's management has asked for a cost estimate to manufacturing the pumps internally Xyon make stamping and casting and has little experence with product that required assembly, the engineering manufacturing and accounting departmet have prepared a report for management that includes the following estimate for an assembly run of 10,000 pumps also the company will hire additional production employees but will need no addotional equipment space or supervision the report estimate the total costs for10,000 units are estimated at $ 1,200,000 0r $120 a unit the current purchase price is $ 88 a unit and the report estimated the continued purchased of the product , if the pumps are purchased the currently unused space could be leased for$ 150,000 annualy
componets $ 270.000
assembly labor 290,000
share of existing facility costs based on labor 640,000
total cost $ 1200,000
assembly labor consit of hourly production workers
A was the analysis prepared by company and continue purchasing the pumps is correct show your calculation
b present several benfit and problem dealing with outside suppliers such Kobec Inc
Explanation / Answer
A was the analysis prepared by company and continue purchasing the pumps is correct -----------NO ========================================================================================================================================================================================= PURCHASE COST make buy difference Purchase per month 880 000 880 000 parts component 270 000 270 000 assembly 290 000 290 000 Facility 640 000 640 000 alternative 150 000 150 000 total 1350 000 1520 000 (170 000) ========================================================================================================================================================================================= it is not financialLY BETTER OFF TO BUY PUMPS
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