Basil Industries produces and sells an instrument used in hospital monitoring systems. The instrument uses a sensor that Basil currently purchases from Suffolk Systems. 12,000 sensors are purchased annually. Basil's engineers believe that it would be possible for Basil to produce the sensor internally. Unit cost estimates to make the sensors are given below: Direct materials Direct labor $33.00 $42.60 Manufacturing overhead $20.40 $96.00 Total unit cost $15.10 of the manufacturing overhead per unit is traceable to sensor production. Of that amount $8.00 represents fixed costs and the remainder of the traceable costs are variable. Based on the above information, what would be the incremental cost of manufacturing the sensors in house? Your answer should represent the total cost for all sensors required for the year. Type your answer... Previous Next