Calibri (Body) | | 11 -A^ | A Copy Format Merge&Center D E Exercise 3 Your Company makes 8000 units of a component part. At this level of activity, the cost per part is Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost per part $3.00 $4.00 $2.00 $15.00 An outside supplier has offered to sell the parts to Your Co. for $12 each. If Your Co. accepts this offer, it will be able to increase production of another product and earn an additional $24000 profit. Of the fixed manufacturing overhead, 60% is allocated and 40% direct. Complete the following table to determine whether you should make or buy the part. Make $24,000 Buy 12 13 14 15 Direct materials Direct labor Variable manufacturing overhead Fxed manufacturing overheacd Purchase price Opportunity cost Total cost $0 $32,000 $0 $16,000 $48,000$28,800 $0 $24,000 $96,000 $0 18 x X What is the difference in cost? Should you make or buy the part? 23 24 25 26 27 28 29 31