ACE Corporations incurs a $9 per unit cost for Product A, which it currently manufactures and sells for $13.50 per unit. Instead of manufacturing and selling this product, ACE can purchase Product B for $5 per unit and sell it for $12 per unit. If it does so, unit sales would remain unchanged and $5 of the $9 per unit costs assigned to Product A would be eliminated. Should the company continue to manufacture Product A or purchase Product B for resale?
Explain each calculation and defend the choice made.© BrainMass Inc. brainmass.com December 15, 2020, 6:25 pm ad1c9bdddf
With Product A, the profit per unit is 13.50-9 = $4.50
With Product B, the cost is $5 and if ...
The solution explains how to make the make or buy decision