Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the requir
Posted: Thu May 19, 2022 1:55 pm
Haver Company currently produces component RX5 for its sole
product. The current cost per unit to manufacture the required
67,000 units of RX5 follows.
Direct materials $ 5.00
Direct labor 9.00
Overhead 10.00
Total costs per unit $ 24.00
Direct materials and direct labor are 100% variable. Overhead is
80% fixed. An outside supplier has offered to supply the 67,000
units of RX5 for $19.00 per unit. Required:
1. Determine the total incremental cost of making 67,000 units
of RX5.
2. Determine the total incremental cost of buying 67,000 units
of RX5.
3. Should the company make or buy RX5?
product. The current cost per unit to manufacture the required
67,000 units of RX5 follows.
Direct materials $ 5.00
Direct labor 9.00
Overhead 10.00
Total costs per unit $ 24.00
Direct materials and direct labor are 100% variable. Overhead is
80% fixed. An outside supplier has offered to supply the 67,000
units of RX5 for $19.00 per unit. Required:
1. Determine the total incremental cost of making 67,000 units
of RX5.
2. Determine the total incremental cost of buying 67,000 units
of RX5.
3. Should the company make or buy RX5?