T&T produces product ‘X’ as a part of its main product. Each year, the company produces 75,000 units of product ‘X’. The costs of production are mentioned below. An outside supplier has offered to deliver 75,000 units of product ‘X’ annually at a cost of $7.35 per unit. A fixed production cost of $ 120,000 is unavoidable for product ‘X’. Should T&T Co. make or buy product ‘X’?

The production costs per unit for manufacturing a unit of product B are:

Production Cost	Amount ($)
Direct Materials	2.55
Direct Labor	1.95
Variable Manufacturing Overhead	1.20

Answer rating: 100% (QA)

The TT Co should make the product X because the cost of making Product X is less compare with the co... View the full answer