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

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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