Eggers Company needs 39,000 units of a part to use in producing one of its products....

 

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Eggers Company needs 39,000 units of a part to use in producing one of its products. If Eggers buys the part from McMillan Company for $110 instead of making it, Eggers will not use the released facilities in another manufacturing activity. Forty percent of the fixed overhead will continue irrespective of CEO Donald Mickey's decision. The cost data are as follows: Cost to make the part: Direct materials $ 41 Direct labor 22 Variable overhead 30 Fixed overhead 20 $113 Required: 1. Determine which alternative is more attractive to Eggers, and by what amount. Alternative Saving per unit Eggers Company needs 39,000 units of a part to use in producing one of its products. If Eggers buys the part from McMillan Company for $110 instead of making it, Eggers will not use the released facilities in another manufacturing activity. Forty percent of the fixed overhead will continue irrespective of CEO Donald Mickey's decision. The cost data are as follows: Cost to make the part: Direct materials $ 41 Direct labor 22 Variable overhead 30 Fixed overhead 20 $113 Required: 1. Determine which alternative is more attractive to Eggers, and by what amount. Alternative Saving per unit

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