3) Differential analysis
Make | Buy | |
Direct material | 291200 | |
Direct labor | 313600 | |
Variable overhead | 173600 | |
Fixed overhead | 31920 | |
Opportunity Cost | 70000 | |
Purchase cost | 880880 | |
Total relevant cost | 880320 | 880880 |
it will save = 880880-880320 = 560
2) Indifferent point
Manufacturing cost = Buying cost
13.90X+101920 = 15.73X
-1.83X = 101920
X(Unit) = 55694 Units
X Company is considering buying a part in 2020 that it has been making for the...
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X Company is considering buying a part in 2020 that it has been making for the past several years. A company has offered to supply this part for $16.12 per unit. Budgeted production in 2020 is 58,000 units, and budgeted per-unit production costs are: Materials $6.10 Direct labor [all variable] 4.60 Total overhead 4.90 Total $15.60 $75,400 of X Company's total overhead costs are fixed; $58,812 of the $75,400 are unavoidable even if it buys the part. Also, if X...
X Company is considering buying a part in 2020 that it has been making for the past several years. A company has offered to supply this part for $16.74 per unit. Budgeted production in 2020 is 50,000 units, and budgeted per-unit production costs are: X Company is considering buying a part in 2020 that it made in 2019. For 2020, the budgeted production cost function is $10.46X + $17,360, where X is the number of units produced. A company has...
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