Dionne currently manufactures a subcomponent that is used in its main product. A supplier has offered to supply all the subcomponents needed at a price of $121. Dionne currently produces 20,200 subcomponents at the following manufacturing costs:
|
Per unit |
| Direct materials |
$ |
42 |
|
| Direct labor |
|
32 |
|
| Variable manufacturing overhead |
|
35 |
|
| Fixed manufacturing overhead |
|
16 |
|
|
|
|
|
| Unit cost |
|
125 |
|
|
|
|
|
|
| a. |
If Dionne has no alternative uses for the manufacturing capacity, what would be the profit impact of buying the subcomponents from the supplier? (Input the amount as positive value. Omit the "$" sign in your response.)
|
| (Click to select) More or Less profit? |
$ |
| b. |
If Dionne has no alternative uses for the manufacturing capacity, what would be the maximum price per unit they would be willing to pay the supplier? (Omit the "$" sign in your response.)
|
| c. |
Now assume Dionne would avoid $320,000 in equipment leases and salaries if the subcomponent were purchased from the supplier. Now what would be the profit impact of buying from the supplier? (Input the amount as positive value. Omit the "$" sign in your response.)
|
| (Click to select) Less or More profit? |
$ |