1) Differential analysis
Make | Buy | |
Direct material | 324900 | |
Direct labor | 245100 | |
Variable overhead | 142500 | |
Fixed overhead | 30780 | |
Opportunity Cost | 80000 | |
Purchase cost | 822510 | |
Total relevant cost | 823280 | 822510 |
it will save = 823280-822510 = 770
4) Indifferent point
Manufacturing cost = Purchase cost
12.50X+110780 = 14.43X
-1.93X = -110780
X(Unit) = 57399 Units
X Company is considering buying a part in 2020 that it has been making for the...
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