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Please complete in excel Problem - Make or Buy Xander Construction uses 1,000 units of Part No. SH314 each month in the production of large
Please complete in excel
Problem - Make or Buy Xander Construction uses 1,000 units of Part No. SH314 each month in the production of large construction equipment. The cost to manufacture one unit of SH314 is presented as follows: Direct Materials Materials handling (10% of materials cost) Direct labor Manufacturing overhead (150% of direct labord Total Manufacturing Cost $200 20 180 270 $670 Materials handling, which is not included in manufacturing overhead, represents the direct variable costs of the receiving department that are applied to direct materials and purchased components on the basis of their cost. Xander's annual manufacturing overhead budget is one- third variable and two-thirds fixed. Anya Castings, one of Xander's reliable vendors, has offered to supply SH314 at a unit price of $500 1. If Xander Construction purchases the 1,000 SH314 units from Anya Castings, the capacity Xander used to manufacture these parts would be idle. Should Xander make or buy the component? What is the cost difference per unit to buy the part? 2. Assume Xander Construction is able to rent all idle capacity for $80,000 per month. If Xander decides to purchase the 1,000 units from Anya Castings, what is Xander's change in monthly cost for SH314? 3. Assume the rental opportunity does not exist. What is the minimum price Xander Construction would be willing to pay Anya Castings if Xander requires a $10,000 savings a month before buving from an outside vendorStep by Step Solution
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