The management of Shatner Manufacturing Company is trying to decide whether to continue manufacturing a part orto buy it from an outside supplier. The part, called CISCO, is a component of the company's finished product.The following information was collected from the accounting records and production data for the year endingDecember 31, 2022.1.8,000 units of CISCO were produced in the Machining Department.2. Variable manufacturing costs applicable to the production of each CISCO unit were:direct materials $4.80, direct labor $4.30, indirect labor $0.43, utilities $0.40.3. Fixed manufacturing costs applicable to the production of CISCO were:Cost ItemDepreciationProperty taxesInsuranceBá ¶IDirect Allocated$2,100U500¶ |900$3,500Total$900 $3,000200All variable manufacturing and direct fixed costs will be eliminated if CISCO is purchased. Allocated costs will not beeliminated if CISCO is purchased. So if CISCO is purchased, the fixed manufacturing costs allocated to CISCO will haveto be absorbed by other production departments.600$1,7004. The lowest quotation for 8,000 CISCO units from a supplier is $80,000.5. If CISCO units are purchased, freight and inspection costs would be $0.35 per unit, and receiving costs totaling$1,300 per year would be incurred by the Machining Department.(d)What nonfinancial factors should management consider in making its decision?T²T₂7001,500$5,200Ix99I

Make or buy decision is required when the company has the option to make something in-house but…

Answered: What nonfinancial factors should…

Business

Accounting

What nonfinancial factors should management consider in making its decision?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter13: Emerging Topics In Managerial Accounting

Section: Chapter Questions

Problem 32BEB: During the week of August 21, Parley Manufacturing produced and shipped 4,000 units of its machine...

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