Question
The estimated costs of producing 6,000 units of a component are: Per Unit Total Direct Material $10 $60,000 Direct Labor 8 48,000 Applied Variable Factory
The estimated costs of producing 6,000 units of a component are:
|
| Per Unit | Total |
| Direct Material | $10 | $60,000 |
| Direct Labor | 8 | 48,000 |
| Applied Variable Factory Overhead | 9 | 54,000 |
| Applied Fixed Factory Overhead | 12 | 72,000 |
| $1.5 per direct labor dollar |
| |
|
| $39 | $234,000 |
The same component can be purchased from market at a price of $29 per unit. If the component is purchased from market, 25% of the fixed factory overhead will be saved.
Should the component be purchased from the market?
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Financial Accounting A Global Perspective
Authors: Rod Monger
1st Edition
0470518405, 978-0470518403
