Assignment
Star Company has been manufacturing 10,000 units of Part 13 per
month. At this level of production, the company’s costs
(expressed on a per-unit basis) follow:
Variable
cost...................................................................................................
$20.00
Fixed
cost...........................................................................................................
7.50
Total
cost per
part...............................................................................
$27.50
Star can outsource the manufacture of 10,000 units of Part 13 to
Huron Company at a cost of $24 per unit to Star. Star
has determined that if it does outsource the part, it can rent for
$5,000 per month the facilities it presently...