Chapter 17 Question 2

Make-or-Buy, Traditional Analysis Wehner Company is currently manufacturing Part ABS-43, producing 50,900 units annually. The part is used in the production of several products made by Wehner. The cost per unit for ABS-43 is as follows: Of the total fixed overhead assigned to ABS-43, $13,030 is direct fixed overhead (the annual lease cost of machinery used to manufacture Part ABS-43), and the remainder is common fixed overhead. An outside supplier has offered to sell the part to Wehner for $57.44. There is no alternative use for the facilities currently used to produce the part. No significant non-unit-based overhead costs are incurred. Required: 1. Should Wehner Company make or buy Part ABS-43? Wehner should the part. This will produce total cost savings of $ 2. What is the maximum amount per unit that Wehner would be willing to pay to an outside supplier? Round your answer to the nearest cent. $ per unit