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Premier Company manufactures gear model G37, which is used in several of its farm-equipment products. Annual production volume of G37 is 10,000 units. Unit costs
Premier Company manufactures gear model G37, which is used in several of its farm-equipment products. Annual production volume of G37 is 10,000 units. Unit costs for G37 are as follows: @ (Click the icon to view the unit costs.) Alternatively, Premier can purchase gear model G37 from an outside supplier for $140 per unit. If G37 is outsourced, Premier can use the facility where G37 is currently manufactured for production of another gear-model G49. This would save Premier $110,000 in facility rental and other costs presently incurred. Requirement Should Premier make or buy G37? By how much will Premier be better off by choosing your decision rather than the alternative? minus sign to show a net additional cost of purchasing the G37. Leave unused cells blank.) Item Relevant amount Savings: : : : : Additional costs: : : S ;l X Data table Direct materials costs $ 65 Direct labor costs 20 Variable overhead costs 30 Fixed overhead costs 12 Total costs $ 127 Print Done
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