The Martinez Company manufactures 4,600 units of a part that could be purchased from an outside...

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The Martinez Company manufactures 4,600 units of a part that could be purchased from an outside supplier for $14 each. Martinez's costs to manufacture each part are as follows: Direct materials $3 Direct labor 2 Variable manufacturing overhead 5 Fixed manufacturing overhead 9 Total $19 All fixed overhead is unavoidable and is allocated based on direct labor. The facilities that are used to manufacture the part have no alternative uses. (a-b) Your answer is correct. (a) Calculate relevant cost to make. Relevent cost to make $ 10 per unit (b) Should Martinez continue to manufacture the part? Yes eTextbook and Media Attempts: 1 of 3 used (c-d) (c) If Martinez could lease the manufacturing facilities to another company for $24,600 per year, what would be the net total cost to outsource production of the part? Net cost to buy $ (d) Should Martinez outsource production of the part given the opportunity to lease the facilities? The Martinez Company manufactures 4,600 units of a part that could be purchased from an outside supplier for $14 each. Martinez's costs to manufacture each part are as follows: Direct materials $3 Direct labor 2 Variable manufacturing overhead 5 Fixed manufacturing overhead 9 Total $19 All fixed overhead is unavoidable and is allocated based on direct labor. The facilities that are used to manufacture the part have no alternative uses. (a-b) Your answer is correct. (a) Calculate relevant cost to make. Relevent cost to make $ 10 per unit (b) Should Martinez continue to manufacture the part? Yes eTextbook and Media Attempts: 1 of 3 used (c-d) (c) If Martinez could lease the manufacturing facilities to another company for $24,600 per year, what would be the net total cost to outsource production of the part? Net cost to buy $ (d) Should Martinez outsource production of the part given the opportunity to lease the facilities?

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Answer Martinez Company Make or Buy Decision a Relevant Cost to Make The relevant cost to make considers only the variable costs that would be elimina... View the full answer