Question
Exercise 8-8 The Outland Company manufactures 1,216 units of a part that could be purchased from an outside supplier for $13 each. Outlands cost to
Exercise 8-8 The Outland Company manufactures 1,216 units of a part that could be purchased from an outside supplier for $13 each. Outlands cost to manufacture each part are as follows: Direct materials $2 Direct labor 4 Variable manufacturing overhead 3 Fixed manufacturing overhead 9 Total $18 All fixed overhead is unavoidable and is allocated based on direct labor. The facilities that are used to manufacture the part have no alternative uses. (a) Calculate relevant cost to make. Relevent cost to make $ per unit (b) Should Outland continue to manufacture the part? LINK TO TEXT (c) Calculate net cost to buy if Outland leases the manufacturing facilities to another company for $6,924 per year. Net cost to buy $ (d) Would your answer change if Outland could lease the manufacturing facilities to another company for $6,924 per year?
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