The Outland Company manufactures 1,090 units of a part that could be purchased from an outside supplier for $12 each. Outland’s cost to manufacture each part are as follows:

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Direct materials $2 Direct labor 3 Variable manufacturing overhead 4 Fixed manufacturing overhead 8 Total $17 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) Calculate relevant cost to make. Relevent cost to make s per unit (b) Should Outland continue to manufacture the part? (c) Calculate net cost to buy if Outland leases the manufacturing facilities to another company for $5,000 per year. Net cost to buy $ (d) Would your answer change if Outland could lease the manufacturing facilities to another company for $5.000 per year? Direct materials $2 Direct labor 3 Variable manufacturing overhead 4 Fixed manufacturing overhead 8 Total $17 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) Calculate relevant cost to make. Relevent cost to make s per unit (b) Should Outland continue to manufacture the part? (c) Calculate net cost to buy if Outland leases the manufacturing facilities to another company for $5,000 per year. Net cost to buy $ (d) Would your answer change if Outland could lease the manufacturing facilities to another company for $5.000 per year?

Answer rating: 100% (QA)

Req a Relevant cost to make the part Direct material ... View the full answer