For many years XYZ Co. has purchased the starters that it installs in its standard line of farm tractors. Due to a reduction in output, the company has idle capacity that could be used to produce recommended against this move, however, pointing out that cost to produce the starters would be greater than the current $25 per unit purchase price: Per unit Total $7 6 4 2 4 Direct materials Direct labor Supervision Depreciation Variable manufacturing overhead Rent Total production cost Direct materials Direct labor A supervisor would have to be hired to oversee production of the starters. However, the company has sufficient idle tools and machinery that no new equipment would have to be purchased. T space utilized in the plant. The total rent on the plant is $182,000 per period. Depreciation is due to obsolescence rather than wear and tear. Supervision Depreciation 4 $27 a) Calculate the differential costs to make the parts. For any entries that do not need an amount, enter 0. Per unit Variable manufacturing overhead Rent Total production cost $156,000 78,000 156,000 ost of purchasing Calculate the differential cost per unit to buy the parts. Per unit Determine the difference per unit in favor of purchasing starters from the outside supplier and decide if XYZ Co. should make or buy the starters. fferential income (loss) per unit in favor of purchasing from the outside supplier Z Co. should (Select one) the starters.

For mary years XYZ Co has purchased the starters that it installs in its otandard line of farm tractors. Due to a reduction in output, the company has idio capacity that could be used to produce For mary years XYZ Co has purchased the starters that it instails in its standard line of farm tractors. Due to a reductor in output, the compan has mocomnended against this move. however. Dointina out that cost to produce the starters would be grester than the current $25 per unit purchase price: A supervisor would have to be hiced to overseo production of the starters. However, the company has sufficient idlo tools and machinery that no new equipment would have to be purchased. TI space utized in the plant. The total rent on the plant is $182,000 per period. Oopreciation is due to obsolescence rather than wear and tear. a) Calculate the differential costs to make the parts. For any entries that do not need an amount, enter 0. Calculate the differential cost per unit to buy the parts Determine the difference per unit in fawor of purchasing starters from the outside suppiter and docide if XYZ Co. should make or buy the starters: ferentar incame (loss) per unit in favor of purchasing from the outsde supplier 2 Co should (Seloct one) the starters