Problem 9-3: The Afl. 60 Per General Overhead Cost

Problem 9-7 (75 minutes) (LO1 CC3, 4)
1. The Afl5.60 per drum general overhead cost is not applicable to the decision, since this cost will be the same paying little mind to whether the organization chooses to make or purchase the drums. Likewise, the present depreciation figure of Afl3.20 per drum is not an applicable cost, since it speaks to a sunk cost notwithstanding the way that the old gear is exhausted and should be supplanted. The cost depreciation of the new gear is an applicable cost, since the new hardware won't be bought if the organization chooses to acknowledge the outside provider's offer. The cost of supervision is pertinent to the choice, since this cost can be evaded by purchasing the drums.
Closing will bring about a $40,000 more prominent misfortune over the two-month time frame than if the organization keeps on working. An extra variable is the potential loss of goodwill among the clients who require the 8,000 units of RG-6 every month. By closing down, the necessities of these clients won't be met, and their business might be for all time lost to another