Exercise 16-18 (Static) The make or buy decision LO 16-2, 16-3

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[The following information applies to the questions displayed below.] Redbud Company uses a certain part in its manufacturing process that it buys from an outside supplier for $36 per part plus another $5 for shipping and other purchasing-related costs. The company will need 18,000 of these parts in the next year and is considering making the part internally. After performing a capacity analysis, Redbud determined that it has sufficient unused capacity to manufacture the 18,000 parts but would need to hire a manager at an annual salary of $54,000 to oversee this production activity. Estimated production costs are determined to be as follows:

Direct material	$ 23
Direct labor	10
Variable overhead	5
Fixed overhead (includes manager at $4 per unit)	8
Total unit cost	$ 46

Exercise 16-18 (Static) Part a

Required:

a. Identify the relevant costs to make this part internally.

Note: You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.

check all that apply

Historical costunanswered

Direct laborunanswered

Direct materialunanswered

Variable overheadunanswered

Fixed overheadunanswered

New manager's salary