X Company currently buys a part from a supplier for $13.21 per unit but is considering...
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X Company currently buys a part from a supplier for $13.21 per unit but is considering making the part itself next year. This year, they purchased 3,200 units of this part; next year, they will need 3,500 units. Estimated costs to make the part next year are: Direct materials Direct labor Variable overhead Fixed overhead Total Per-Unit $2.86 3.32 4.30 5.90 $16.38 Total $9,152 10,624 13,760 18,880 $52,416 Of the estimated fixed overhead, $10,573 would be additional fixed overhead costs; the remainder would be common costs allocated to the part. X Company currently receives $2,500 a year by renting unused factory space, but it will have to use this space to make the part. If X Company continues to buy the part instead of making it, it will save X Company currently buys a part from a supplier for $13.21 per unit but is considering making the part itself next year. This year, they purchased 3,200 units of this part; next year, they will need 3,500 units. Estimated costs to make the part next year are: Direct materials Direct labor Variable overhead Fixed overhead Total Per-Unit $2.86 3.32 4.30 5.90 $16.38 Total $9,152 10,624 13,760 18,880 $52,416 Of the estimated fixed overhead, $10,573 would be additional fixed overhead costs; the remainder would be common costs allocated to the part. X Company currently receives $2,500 a year by renting unused factory space, but it will have to use this space to make the part. If X Company continues to buy the part instead of making it, it will save
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Related Book For
Accounting What the Numbers Mean
ISBN: 978-0073527062
9th Edition
Authors: David H. Marshall, Wayne W. McManus, Daniel F. Viele,
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