1. What are the alternatives facing Zion Manufacturing with respect to  List the relevant costs for each alternative. If required, round your answers to the nearest cent.   Total Relevant Cost Make $ per unit Buy $ per unit Differential Cost to Make $ per unit If Zion decides to purchase the component from Bryce, by how much will operating income increase or decrease?   $ 3.  Conceptual Connection: Which alternative is better?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Zion Manufacturing had always made its components in-house. However, Bryce Component Works had recently offered to supply one component, K2, at a price of $11 each. Zion uses 4,900 units of Component K2 each year. The cost per unit of this component is as follows:

Direct materials $7.23
Direct labor 2.14
Variable overhead 1.29
Fixed overhead 4.00
   Total $14.66

1. What are the alternatives facing Zion Manufacturing with respect to

 List the relevant costs for each alternative. If required, round your answers to the nearest cent.

  Total Relevant Cost
Make $ per unit
Buy $ per unit
Differential Cost to Make $ per unit

If Zion decides to purchase the component from Bryce, by how much will operating income increase or decrease?
  $

3.  Conceptual Connection: Which alternative is better?

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