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Innova uses 1,050 units of the component IMC2 every month to manufacture one of its products. The unit costs incurred to manufacture the component are
Innova uses 1,050 units of the component IMC2 every month to manufacture one of its products. The unit costs incurred to manufacture the component are as follows. Direct materials $55.34 Direct labor 39.31 Overhead 126.50 $221.15 Total Overhead costs include variable material handling costs dollars and consist of 60% variable costs and 40% fixed costs. .76, which are applied to products on the basis direct material costs. The remainder of the overhead costs are applied on the basis of direct labor vendor has offered to supply the IMC2 component a price $290 per unit. (a) make or buy IMC2 Prepare the incremental analysis for the decision Net Income Increase (Decrease) Make IMC2 (per unit) Buy IMC2 (per unit) Direct material x x Direct labor Material handling Varlable overhead Purchase price Total unit cost 53
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