A company pays ($ 5) per unit to buy a part for a product it manufactures. It
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A company pays \(\$ 5\) per unit to buy a part for a product it manufactures. It can make the part for \(\$ 1.50\) per unit for direct materials and \(\$ 3.50\) per unit for direct labor. The company normally applies overhead costs at a predetermined rate of \(50 \%\) of direct labor cost. Incremental overhead cost to make this part is \(\$ 0.75\) per unit. Should the company make or buy the part?
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