Question: You make widgets that attach to your main product which is a whatchamacallit. You have identified another company from whom you could buy widgets and
You make widgets that attach to your main product which is a whatchamacallit. You have identified another company from whom you could buy widgets and then you would not have to make them for yourself. Below are your cost for making widgets, calculate which cost as Avoidable and which are Unavoidable and the Avoidable and unavoidable Cost Per Widget.
| Total in House | Avoidable | Unavoidable | |
| Loan on Widget Making Machine | $50,000 | ||
| Wages of Widget Makers | $150,000 | ||
| Raw Materials for Widgets | $37,000 | ||
| Lease Payment on Widget Shop | $5,000 | ||
| Maintenance on Widget Equipment | $3,750 | ||
| Totals | $245,750 | ||
| Cost per Widget (Total/50,000) | $4.92 |
What is the AVOIDABLE Cost per Widget?
Assuming you could buy widgets for $3.00 per unit, calculate the Total Cost per Widget.
| Unavoidable Cost Per Widget | |
| Purchase Cost per Widget | |
| Total Cost to Buy per Widget |
What is the Total Cost to Per Widget if Bought?
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