Question: inc. Is considerting whether to continue to make a component or to buy t from an outside supplier. The company uses 14,200 of the components
inc. Is considerting whether to continue to make a component or to buy t from an outside supplier. The company uses 14,200 of the components each year. The unit product cost of the component according to the company's absorption cost accounting system is gven as follows Direct meterials Direct labor Veriable manufecturing overheed Fixed manufacturing overhead Unit product cost $10.00 7.00 2.80 4.80 $24.60 Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 30% ls avoidable if the component were bought from the outside supplier, the remainder is not avoidable. In addition, making the component uses 1 minute on the machine that is the company's current constraint If the component were bought, time would be freed up for use on another product that requires 2 minutes on this machine and that hes a contribution margin of $6.40 per unt. When deciding whether to make or buy the component, what cost of making the component should be compared to the price of buying the component? Round your intermedilate calculations and final answer to 2 decimal places) O $2400 per unit O s24 44 per unit O$27.80 per unit O $2124 per unit O Type here to search
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