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Beto Company pays $2.50 per unit to buy a part for one of the products it manufactures. With excess capacity, the company is considering
Beto Company pays $2.50 per unit to buy a part for one of the products it manufactures. With excess capacity, the company is considering making the part. Making the part would cost $1.20 per unit for direct materials and $1.00 per unit for direct labor. The company normally applies overhead at the predetermined rate of 200% of drect labor cost Incremental overhead to make the part would be 80% of direct labor cost (a) Prepare a make or buy analysis of costs for this part. (Enter your answers rounded to 2 decimal places.) (b) Should Beto make or buy the part? (a) Make or Bhiry Analysis Direct materials Direct labor Overhead Cost to buy Cost per un Cost difference (b) Company should Mako Buy S 120 1.00 0.00
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