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Woody Company makes a product that includes a component part, Item XJ7. Presently, the company purchases XJ7 from an outside supplier for $40 each Woody
Woody Company makes a product that includes a component part, Item XJ7. Presently, the company purchases XJ7 from an outside supplier for $40 each Woody Company is considering manufacturing XJ7 itself. Estimated total manufacturing costs for the yearly requirement of 1,000 units of XJ7 follow: Direct materials Direct labor Unit-related overhead Batch-related overhead Facility sustaining overhead (allocated to each product line based on relative sales in dollars) $6,000 $7,000 $4,000 25,000 40,000 Total $82,000 Should Woody Company make or buy component XJ7? The relevant costs to make are $17,000. The relevant costs to buy are $40,000. The company should make XJ7. The relevant costs to make are $82,000. The relevant costs to buy are $40,000. The company should buy XJ7. Relevant cost to make are $13,000. Relevant costs to buy are $40,000. The company should make XJ7. Relevant costs to make are $42,000. Relevant costs to buy are $40,000. The company should buy XJ7
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