Homework Answers
Total fixed overhead = $9 X 30,000 = $270,000
Avoidable fixed cost = $60,000
Unavoidable fixed cost = $270,000 - $60,000 = $210,000
Total cost to buy = ($41 X 30,000) + $210,000 = $1,440,000
Total cost to make = $43 X 30,000 = $1,290,000
Total loss (annually) = $1,440,000 - $1,290,000 = $150,000
Loss per unit = $150,000 / 30,000 = $5 per unit
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