Coronado Industries produces the component parts needed for its popular non-commercial-use drones. One of the key parts has become more costly to produce than first planned, however, so management is considering outsourcing that part. The costs to produce one such part internally include DM of $3.00, DL of $1.70, variable MOH of $0.50, and fixed MOH of $2.00. Coronado could purchase the part from a supplier for $6.50 each. If the company decides not to manufacture this part, 70% of its fixed MOH costs would continue. Should Coronado continue to make the part or buy it from the supplier? (Round answers to 2 decimal places, e.g. 15.25.)
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This includes Direct Materials (DM), Direct Labor (DL), Variable Manufacturing Overhead (variable MOH), and Fixed Manufacturing Overhead (fixed MOH). Total production cost per part = DM + DL + Variable MOH + Fixed MOH Total production cost per part = $3.00 + $1.70 Show more…
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