Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 52,000 units of RX5 follows. Direct materials $ 4.00 Direct labor 8.00 Overhead 9.00 Total costs per unit $ 21.00 Direct materials and direct labor are 100% variable. Overhead is 70% fixed. An outside supplier has offered to supply the 52,000 units of RX5 for $19.00 per unit. Required: 1. Determine the total incremental cost of making 52,000 units of RX5. 2. Determine the total incremental cost of buying 52,000 units of RX5. 3. Should the company make or buy RX5?
Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 52,000 units of RX5 follows. Direct materials $ 4.00 Direct labor 8.00 Overhead 9.00 Total costs per unit $ 21.00 Direct materials and direct labor are 100% variable. Overhead is 70% fixed. An outside supplier has offered to supply the 52,000 units of RX5 for $19.00 per unit. Required: 1. Determine the total incremental cost of making 52,000 units of RX5. 2. Determine the total incremental cost of buying 52,000 units of RX5. 3. Should the company make or buy RX5?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 52,000 units of RX5 follows.
| Direct materials | $ | 4.00 | |
| Direct labor | 8.00 | ||
| Overhead | 9.00 | ||
| Total costs per unit | $ | 21.00 | |
Direct materials and direct labor are 100% variable. Overhead is 70% fixed. An outside supplier has offered to supply the 52,000 units of RX5 for $19.00 per unit.
Required:
1. Determine the total incremental cost of making 52,000 units of RX5.
2. Determine the total incremental cost of buying 52,000 units of RX5.
3. Should the company make or buy RX5?
Transcribed Image Text:Required 1
Required 2
Required 3
Determine the total incremental cost of buying 52,000 units of RX5.
Incremental cost of buying RX5
Buying the units
Total incremental cost of buying 52,000 units
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Required 3 >
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Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
Determine the total incremental cost of making 52,000 units of RX5,
Incremental cost of making RX5
Making the units
Total incremental cost of making 52,000 units
0.
Required 2 >
( Prev
2 of 7
071...jpg
143976753 50770..jpg
143846276 29040...jpg
ere to search
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