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Juliet's Office Furniture is considering buying the legs it uses in the manufacture of office desks from an outside vendor. Currently, Juliet's Office Furniture makes

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Juliet's Office Furniture is considering buying the legs it uses in the manufacture of office desks from an outside vendor. Currently, Juliet's Office Furniture makes the legs in its own manufacturing facility. Juliet's Office Furniture can buy the legs from an outside supplier for $5.75 each. The company uses 200,000 legs each year. Information about Juliet's Office Furniture's cost to manufacture the 200,000 legs is as follows: Per Unit Total Direct Material $2.50 $500,000 Direct Labour $0.50 $100,000 $2.00 Variable Overhead $400,000 Fixed Overhead $1.25 $250,000 Total $6.25 $1,250,000 Fixed cost for Juliet's Office Furniture would not change if the company stopped making the legs. Required: Prepare a relevant cost schedule that indicates whether Juliet's Office Furniture should buy the legs from the outside supplier or continue to make them. ALL CALCULATIONS MUST BE SHOWN

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