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LaSalle Manufacturing had always made its components in-house. However, Jasper Component Works had recently offered to supply one component, C-430, at a price of $12
LaSalle Manufacturing had always made its components in-house. However, Jasper Component Works had recently offered to supply one component, C-430, at a price of $12 each. LaSalle uses 4, 200 units of Component C-430 each year. The cost per unit of this component is as follows: Direct materials $7.92 Direct labor 2.17 Variable overhead 1.73 Fixed overhead 4.00 Total $15.82 The fixed overhead is an allocated expense; none of it would be eliminated if production of Component C-430 stopped. Required: List the relevant costs for each alternative. If required, round your answers to two decimal places. Total Relevant Cost Make $_____ per unit Buy $_______ per unit Differential Cost to Make $_______ per unit If LaSalle decides to purchase the component from Jasper, by how much will operating income increase or decrease? Decrease $____ Conceptual Connection: Which alternative is better
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