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Delanda Inc. is considering whether to continue to make a component or to buy it from an outside suppler. The company uses 11.900 of the
Delanda Inc. is considering whether to continue to make a component or to buy it from an outside suppler. The company uses 11.900 of the components each year. The unit product cost of the component according to the company's cost accounting system is given as follows Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cont 8 7.70 4.70 0.50 2.50 $15.40 Assume that direct labor is a variable cost of the feed manufacturing overhead, 40is avoidable the compongnt were bort from the outside supplier. In addition, making the component uses & minutes on the machine that is the company current construint the component were bought time would be freed up for use on another product that requires minutes on this machine and that has contribution margin of $10 pert When deciding whether to make or buy the component, what cost of making the component should be compared to the price of buying the component? (Round your intermediate calculations to 2 decimal places) Multiple Choice $17.45 per unit $13.90 per unit $15.95 per unit
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