Theestimatedcostsofproducing6,000unitsofacomponentare:

The same component can be purchased from the market at a price of $29 per unit. If the component is purchased from the market, 25% of the fixed factory overhead will be saved. Should the component be purchased from the market?

Per Unit Total Direct Material $ 10 $ 60,000 Direct Labor $ 8 $ 48,000 Applied Variable Factory Overhead $ 9 $ 54,000 Applied Fixed Factory Overhead $ 12 $ 72,000 $1.5 per direct labor dollar $ 39 $ 234,000