Haver Company currently pays an outside supplier $31 per unit for a part for one of its products. Haver is considering two alternative methods of making the part. Method 1 for making the part would require direct materials of $13 per unit, direct labor of $16 per unit, and incremental overhead of $3 per unit. Method 2 for making the part would require direct materials of $13 per unit, direct labor of $10 per unit, and incremental overhead of $7 per unit. Required: 1. Compute the cost per unit for each alternative method of making the part. 2. Should Haver make or buy the part? If Haver makes the part, which production method should it use?
Haver Company currently pays an outside supplier $31 per unit for a part for one of its products. Haver is considering two alternative methods of making the part. Method 1 for making the part would require direct materials of $13 per unit, direct labor of $16 per unit, and incremental overhead of $3 per unit. Method 2 for making the part would require direct materials of $13 per unit, direct labor of $10 per unit, and incremental overhead of $7 per unit. Required: 1. Compute the cost per unit for each alternative method of making the part. 2. Should Haver make or buy the part? If Haver makes the part, which production method should it use?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Subject : Accounting
Transcribed Image Text:Required 1 Required 2
Should Haver make or buy the part? If Haver makes the part, which production method should it use?
Should Haver make or buy the part?
If Haver makes the part, which production method should it use?
Transcribed Image Text:Haver Company currently pays an outside supplier $31 per unit for a part for one of its products. Haver is considering two alternative
methods of making the part. Method 1 for making the part would require direct materials of $13 per unit, direct labor of $16 per unit,
and incremental overhead of $3 per unit. Method 2 for making the part would require direct materials of $13 per unit, direct labor of
$10 per unit, and incremental overhead of $7 per unit.
Required:
1. Compute the cost per unit for each alternative method of making the part.
2. Should Haver make or buy the part? If Haver makes the part, which production method should it use?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Compute the cost per unit for each alternative method of making the part.
Make with Method
1
Make with
Method 2
Cost per unit
Cost per unit
$
$
0 $
60
Buy
0
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