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Assuming there are no better uses for the spare capacity, the carying cases thould be since costs per unit would by by doing so, The
Assuming there are no better uses for the spare capacity, the carying cases thould be since costs per unit would by by doing so, The fixed iaclocy overtead is to the decision. Diamond Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $59 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 40% of direct labor cost. The fully absorbed unit costs to produce comparable carrying cases are expected to be as follows: If Diamond Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 15% of the direct labor costs
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