X Company currently buys a part from a supplier for $12.94 per unit but is consi

Question

X Company currently buys a part from a supplier for $12.94 per unit but is considering making the part itself next year. This year, they purchased 3,000 units of this part; next year, they think they will need 3,400 units. Estimated costs to make the part are: Direct materials Direct labor Variable overhead Fixed overhead Total Per-Unit $3.65 3.26 3.70 4.50 Total $10,950 9,780 11,100 13,500 $15.11 $45,330 Of the estimated fixed overhead, $6,345 are common costs that would be allocated to the part; the rest would be additional fixed overhead costs. X Company currently rents unused factory space for $2,300; it will have to use this space to make the part. If X Company continues to buy the part instead of making it, it will save

Explanation / Answer

Determine make or buy :

If company makes part instead of buying it, it will save $1533...

Make Buy Direct materials 12410 direct labour 11084 variable overead 12580 fixed overhead 7155 purchase cost 43996 Opportunity cost 2300 Total 45529 43996

Related Questions

Navigate

• Browse (All)
• Browse X
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.