University Of Houston Operations And Supply Chain Management Assignment Help - Incremental analysis

Question - Barnes Company manufactured 6,000 units of a component part that is used in its product and
incurred the following costs:

Direct materials $35,000
Direct labor 15,000
Variable manufacturing overhead 10,000
Fixed manufacturing overhead 20,000
$80,000

Another company has offered to sell the same component part to the company for $12.00 per unit.
The fixed manufacturing overhead consists mainly of depreciation on the equipment used to
manufacture the part and would not be reduced if the component part was purchased from the
outside firm. If the component part is purchased from the outside firm, Barnes Company has the
opportunity to use the factory equipment to produce another product which is estimated to have a
contribution ma ...Read More rgin of $16,000.

Instructions
Prepare an incremental analysis report for Barnes Company which can serve as informational input
into this make or buy decision. ...Read Less

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