Question
CBI Products manufactures office desks and is considering buying the desk legs from an outside supplier. CBI Products currently manufactures these legs in its own
CBI Products manufactures office desks and is considering buying the desk legs from an outside supplier. CBI Products currently manufactures these legs in its own manufacturing facility. They can buy the desk legs from an outside supplier for $1.44 each. The company uses 250,000 desk legs each year. Information about CBI Products cost to manufacture the 250,000 desk legs is below: Per Unit Direct material $.63 Direct labor .13 .50 .30 Variable overhead Fixed overhead Total $1.56 80% of the fixed costs for CBI Products would not change if the company stopped making the desk legs. Required: Prepare a relevant cost schedule that indicates whether CBI Products should buy the desk legs or continue to make them. Show BOTH the per unit and total costs in your analysis. ALL CALCULATIONS MUST BE SHOWN
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started