3. Collins Company uses 12,000 units of a part in its production process. The costs to...
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3. Collins Company uses 12,000 units of a part in its production process. The costs to make a part are: direct material, $15; direct labor, $27; variable overhead, $15; and applied fixed overhead, $32. Eichholtz has received a quote of $60 from a potential supplier for this part. If Collins buys the part, 75 percent of the applied fixed overhead would continue. Collins Company would be better off by a. $30,000 to manufacture the part. b. $348,000 to buy the part. c. $60,000 to buy the part. d. $216,000 to manufacture the part. 3. Collins Company uses 12,000 units of a part in its production process. The costs to make a part are: direct material, $15; direct labor, $27; variable overhead, $15; and applied fixed overhead, $32. Eichholtz has received a quote of $60 from a potential supplier for this part. If Collins buys the part, 75 percent of the applied fixed overhead would continue. Collins Company would be better off by a. $30,000 to manufacture the part. b. $348,000 to buy the part. c. $60,000 to buy the part. d. $216,000 to manufacture the part.
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