Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Ortiz Co. produces 5,000 units of part A12E. The following costs were incurred for that level of production: Direct materials $ 55,000 Direct labor 160,000
Ortiz Co. produces 5,000 units of part A12E. The following costs were incurred for that level of production: Direct materials $ 55,000 Direct labor 160,000 Variable overhead 75,000 Fixed overhead 175,000 An outside vendor has offered to make the part and sell it to Ortiz for $70 per unit. Ortiz is deciding whether to make or buy the part. If Ortiz buys the part from an outside supplier, fixed overhead will not change and all of the fixed overhead will be allocated to other parts manufactured by Ortiz After completing the make or buy analysis, Ortiz found that: O it would be $12 per unit more expensive to buy the part than to make it it would be $23 per unit cheaper to buy the part than to make it. It would be $15 per unit cheaper to buy the part than to make it it would be 54 per unit more expensive to buy the part than to make it
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started