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Piels Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units
Piels Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows: Direct materials $ 90,000 Direct labor 130,000 Variable factory overhead 60,000 Fixed factory overhead 140,000 Total costs $420,000 Of the fixed factory overhead costs, $60,000 is avoidable. Conners Company has offered to sell 10,000 units of the same part to Piels Corporation for $36 per unit. Assuming there is no other use for the facilities, should Piels make the part or buy it from Conners? buy the part, as this would save $6 per unit make the part, as this would save $6 per unit make the part, as this would save $2 per unit buy the part, as this would save the company $60,000
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