Bruin Manufacturing currently makes the 15,000 ball bearings it uses each year in its railroad…

Bruin Manufacturing currently makes the 15,000 ball bearings it uses each year in its railroad car wheels. There is no other use for these production facilities, nor is there a market for the depreciable items. Raider, Inc., has just submitted a bid to manufacture the ball bearings for Bruin at a price of $20 per bearing. If Bruin no longer makes the ball bearings, the product manager will lose his job. The standard cost card lists the following costs of making one ball bearing: Required a. Does it make sense for Bruin to purchase the ball bearings from Raider? Show your calculations. b. Assume the same information just presented, except that Bruin has the opportunity to use the freed-up manufacturing facilities to increase production of its existing line of bicycle tires. This additional production would generate $65,000 a year in contribution margin. Does it make financial sense for Bruin to purchase the ball bearings from Raider? What nonfinancial considerations should impact the decision?

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