32,954 DO $4,284 EO S6,211 FO $9,006 8 ptXCompany currently makes a part and is

Question

32,954 DO $4,284 EO S6,211 FO $9,006 8 ptXCompany currently makes a part and is considering buying it next year from a company that has offered to supply it for $17.12 per unit. This year, total costs to produce 50,000 units were: Direct materials Direct labor Overhead $290,000 290,000 275,000 Of the overhead costs, $75,000 were fixed, and $49,500 of these fixed overhead costs are unavoidable even if X Company bu the part. Production next year is not expected to change. If X Company continues to make the part instead of buying it will save 2. AO 16,565 BO $24,019 CO $34,828 DO $50,500EO S73,225 FO 106,176

Explanation / Answer

Calculate relevant cost ;

If X company continues to make the part instead of buying it will save $50500

so answer is d) $50500

Make Buy Direct material 290000 Direct labour 290000 Variable overhead 200000 Fixed overhead 25500 Purchase cost 856000 Total 805500 856000

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