CBI Products manufactures office desks and is considering buying the desk legs from an outside supplier. CBI Products currently manufactures these legs in its own manufacturing facility. They can buy the desk legs from an outside supplier for $1.44 each. The company uses 250,000 desk legs each year. Information about CBI Products cost to manufacture the 250,000 desk legs is below:

	Per Unit
Direct material	$.63
Direct labor	.13 .50 .30
Variable overhead
Fixed overhead
Total		$1.56

80% of the fixed costs for CBI Products would not change if the company stopped making the desk legs.

Required: Prepare a relevant cost schedule that indicates whether CBI Products should buy the desk legs or continue to make them. Show BOTH the per unit and total costs in your analysis.

Answer rating: 100% (QA)

cost of buy from an outside supplier 144 Total cost 250000144 360000 unavo... View the full answer