ake-or-Buy, Traditional Analysis ehner Company is currently manufacturing Part ABS-43, producing 55,100 units annually. The part is used in the production of several products made by Wehner. The ost per unit for ABS-43 is as follows: Direct materials $45.15 Direct labor 9.70 Variable overhead 3.40 Fixed overhead 4.25 Total $62.50 Of the total fixed overhead assigned to ABS-43, $15,153 is direct fixed overhead (the annual lease cost of machinery used to manufacture Part ABS-43), and the remainder is common fixed overhead. An outside supplier has offered to sell the part to Wehner for $58.13. There is no alternative use for the facilities currently used to produce the part. No significant non-unit-based overhead costs are incurred. Required: 1. Should Wehner Company make or buy Part ABS-43? Wehner should buy ✔the part. This will produce total cost savings of $ x. 2. What is the maximum amount per unit that Wehner would be willing to pay to an outside supplier? Round your answer to the nearest cent. X per unit

ake-or-Buy, Traditional Analysis ehner Company is currently manufacturing Part ABS-43, producing 55,100 units annually. The part is used in the production of several products made by Wehner. The ost per unit for ABS-43 is as follows: Direct materials $45.15 Direct labor 9.70 Variable overhead 3.40 Fixed overhead 4.25 Total $62.50 Of the total fixed overhead assigned to ABS-43, $15,153 is direct fixed overhead (the annual lease cost of machinery used to manufacture Part ABS-43), and the remainder is common fixed overhead. An outside supplier has offered to sell the part to Wehner for $58.13. There is no alternative use for the facilities currently used to produce the part. No significant non-unit-based overhead costs are incurred. Required: 1. Should Wehner Company make or buy Part ABS-43? Wehner should buy ✔the part. This will produce total cost savings of $ x. 2. What is the maximum amount per unit that Wehner would be willing to pay to an outside supplier? Round your answer to the nearest cent. X per unit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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