X Company currently makes a part and is considering buying it next year from a company...

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X Company currently makes a part and is considering buying it next year from a company that has offered to supply it for $17.

business accounting

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Answer 1

Answer #1

Differential analysis

	Make	Buy
Direct material (69950*7.5)	524625
Direct labor (69950*4.7)	328765
Variable overhead (69950*4.3)	300785
Fixed overhead	53820
Opportunity Cost	15000
Purchase cost (69950*17.12)		1197544
Total relevant cost	1222995	1197544

it will save = 1222995-1197544 = 25451

So answer is d) 25451

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Answer 2

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