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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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