Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Teach inc. is considering whether to continue to make a component or to buy it from an outside supplier. The company uses 15,000 of the

image text in transcribed
Teach inc. is considering whether to continue to make a component or to buy it from an outside supplier. The company uses 15,000 of the components each year. the unit product cost of the component according to the company's absorption cost accounting system is given as follows: Assume that direct labor is a variable cost. Of the fixed manufacturing overhead 10% is avoidable if the component were bought from the outside supplier; the remainder is not avoidable. in addition, making the component uses 3 minutes on the machine that is the company's current constraint, if the component were bought, time would be freed up for use on another product that requires 6 minutes on these machine and that has a contribution margin of $8.10 per unit. When deciding whether to make or buy the component, what cost of making the component should be compared to the price of buying the component? A.$15.55 per unit B.$11.50 per unit C.$19.15 per unit D.$15.10 per unit

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Advances In Behavioral Research

Authors: Lawrence A. Ponemon, David R.L. Gabhart

1st Edition

ISBN: 0387976191, 978-0387976198

More Books

Students also viewed these Accounting questions

Question

What is management growth? What are its factors

Answered: 1 week ago

Question

Explain basic guidelines for effective multicultural communication.

Answered: 1 week ago

Question

Identify communication barriers and describe ways to remove them.

Answered: 1 week ago

Question

Explain the communication process.

Answered: 1 week ago