Question
Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 61,000 units of RX5 follows. Direct
Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 61,000 units of RX5 follows.
| Direct materials | $ | 4.00 | |
| Direct labor | 8.00 | ||
| Overhead | 9.00 | ||
| Total costs per unit | $ | 21.00 | |
Direct materials and direct labor are 100% variable. Overhead is 70% fixed. An outside supplier has offered to supply the 61,000 units of RX5 for $19.00 per unit. Required: 1. Determine the total incremental cost of making 61,000 units of RX5. 2. Determine the total incremental cost of buying 61,000 units of RX5. 3. Should the company make or buy RX5?
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Auditing Cases An Interactive Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
6th edition
133852105, 978-0133852103
