Boston Company use a special part in manufacturing of its finished products. The unit cost this special part is $ 65 and details of its manufacturing cost is as follows. The $50 unit product cost of this part is based on average 25,000 number of parts produced each year. An outside supplier has offered to supply the 25,000 parts at a cost of $65 per part. The special equipment used to manufacture the above part. This equipment can only be used for manufacturing of this part and if not used it has no resale value. The total amount of general factory overhead, which is allocated based on direct labor-hours, would be unaffected by this decision because it is fixed cost. . Suggest the management whether to stop producing internally and buy them from the outside supplier? Description CAD Direct Materials 15 Direct Labor 10 Variable overheads 05 Depreciation of Special Equipment 10 Supervisor's Salary 15 General factory overhead (fixed) 10

Unit product cost 65