Question
P3. (make or buy) Coyote Company incurs the following costs in producing 10,000 covers. Direct material costs $20,000 Direct labor costs $50,000 Variable manufacturing
P3. (make or buy) Coyote Company incurs the following costs in producing 10,000 covers. Direct material costs $20,000 Direct labor costs $50,000 Variable manufacturing overhead $30,000 Fixed manufacturing overhead $40,000 Total manufactuig costs $140,000 Manuafacturing costs/unit - $100,000/10,000 units - $14 If Coyote buys them, the purchasing cost would be $ 12/unit, and Coyote has to assume $26,000 of fixed manufacturing overhead. Instruction) Prepare an analysis showing Coyote should make or buy the covers. And B Make Buy Incremental costs 1 Direct material cost $20,000 ($20,000) 2 Direct labor cost $50,000 0 ($50,000) 3 Variable $30,000 0 ($30,000) 4 manufacturing overhead Fixed manufacturing $40,000 $26,000 ($14,000) 5 overhead Purchasing costs $0 6 Total manufacturing $100,000 7 costs
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