Question: Cans Inc. is considering purchasing component YY instead if producing it in-house. Component YY can be purchased for $207. The following cost information pertains to

Cans Inc. is considering purchasing component YY instead if producing it in-house. Component YY can be purchased for $207.

The following cost information pertains to the production of component YY. Cans Inc. uses 75,000 compenents per year.

Direct Materials $100.80
Direct Labor (10 minutes per part)
($18 per hour) $3
Variable OH $4.60
Fixed OH $234,000
Depreciation

$32,420

Prepare an incremental analysis to determine if component YY should continue to be produced in-house or purchased from an outside vendor.

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