Explore BrainMass

Explore BrainMass

    Peluso Company: Make or buy decision

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Peluso Company, a manufacturer of snowmobiles, is operating at 70% of plant capacity. Peluso's plant manager is considering making the headlights now being purchased from an outside supplier for $11 each. The plant has idle equipment that could be used to manufacture the headlights. The design engineer estimates that each headlight requires $4 of direct materials, $3 of direct labor, and $6.00 of manufacturing overhead. Forty percent of the manufacturing overhead is a fixed cost that would be unaffected by this decision. A decision by Peluso Company to manufacture the headlights should result in a net gain (loss) for each headlight in what amount?

    © BrainMass Inc. brainmass.com June 4, 2020, 2:44 am ad1c9bdddf
    https://brainmass.com/business/accounting/peluso-company-make-buy-decision-476385

    Solution Summary

    The expert examines the make or buy decision for Peluso Company.

    $2.19

    ADVERTISEMENT