Question

Cruise Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a production level of 6 200 units are as follows Direct materials 54.30 Direct labor S420 Variable manufacturing overhead 53.10 Fixed manufacturing overhead $1.40 Total cost $13.00 O A. Make the part and save $10 20 per unit O B. Buy from Suri and save $110 per unit OC. Make the part and save $5.00 per unit OD. Make the part and save $2.50 per unit

Answer 1

Calculation Purchak Price Perunit fixed cost per unit Total cost of buying & 14.10 & 1.40 $ 15.50 Add less Buying Cost Per unit $ 15.50 making cost per unit $ 13.00 Saving from making & 2.50 option d is correct, make part & Save 2.5 I fixed costs are unavoidable so even if the Company buy parts foom other Company it will incur fixed cost or to we add Cost of purchasing from other Company & unavoidable fixed cost to get cost Company will incut if it buy from outer source. on the other hand it can make path within company at less cost. Company Con Save $2.50 per unit by making parts in house