Question: please do explain how you come up with your answers PROBLEM #3 MAKE OR BUY PROBLEM Malee Company has 15,000 hours of idle capacity. They

please do explain how you come up with your answers

please do explain how you come up with your answers PROBLEM #3

PROBLEM #3 MAKE OR BUY PROBLEM Malee Company has 15,000 hours of idle capacity. They need 20,000 units of a component part used in its products lines. It is estimated that each unit will take one-half machine hour for production. The following information is available. Cost to make the parts: Materials P14 Direct labor 18 Factory overhead (75% of direct labor cost per unit) Variable factory overhead (40% of factory overhead per unit) Cost to buy the parts per unit from the supplier P45 If the Malee Company buys the parts rather than producing them, it will save 60% of fixed overhead cost per unit. REQUIRED: 1. Determine the relevant unit costs. A 2. Determine the relevant total costs and differential costs. 3. Should Malee Company manufacture the parts, or should it buy them from the outside supplier

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