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Assume the following cost data relate to the decision to produce Total units expected to be produced or bought from the market 10,000 Total Costs
Assume the following cost data relate to the decision to produce |
| |
Total units expected to be produced or bought from the market | 10,000 | |
| Total Costs | Unit Cost |
Rental of equipment | $12,000 | $1.20 |
Equip. depreciation | 2,000 | $0.20 |
Direct materials | 9,000 | 0.90 |
Direct labor | 15,000 | 1.50 |
Variable overhead | 6,000 | 0.60 |
Fixed overhead (non-avoidable) | 24000 | 2.40 |
Total | $68,000 | $6.80 |
Purchase cost | 44,000 | $4.40 |
Should the company acquire the product form the market
a. | Yes | |
b. | No | |
c. | Indifferent to to make or to buy | |
d. | Yes if the market price per unit less than $4.50 |
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