Make-or-Buy Decision, Alternatives, Relevant Costs Each year, Giada Company produces 24,000 units of a component part used in tablet computers. An outside supplier has offered to supply the part for $1.39. The unit cost is: Direct materials Direct labor Variable overhead Fixed overhead Total unit cost $0.87 0.32 0.11 2.00 $3.3 - 3. Which alternative is more cost effective and by how much? Making the part in house ✓ by 4. What if $18,920 of fixed overhead is rental of equipment used only in production of the component that can be avoided if the component is purchased? Which alternative is more cost effective and by how much? Buying the part from the external supplier by $
Make-or-Buy Decision, Alternatives, Relevant Costs Each year, Giada Company produces 24,000 units of a component part used in tablet computers. An outside supplier has offered to supply the part for $1.39. The unit cost is: Direct materials Direct labor Variable overhead Fixed overhead Total unit cost $0.87 0.32 0.11 2.00 $3.3 - 3. Which alternative is more cost effective and by how much? Making the part in house ✓ by 4. What if $18,920 of fixed overhead is rental of equipment used only in production of the component that can be avoided if the component is purchased? Which alternative is more cost effective and by how much? Buying the part from the external supplier by $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Make-or-Buy Decision, Alternatives, Relevant Costs
Each year, Giada Company produces 24,000 units of a component part used in tablet computers. An outside supplier has offered to
supply the part for $1.39. The unit cost is:
Direct materials
Direct labor
Variable overhead
Fixed overhead
Total unit cost
$0.87
0.32
0.11
2.00
$3.3
3. Which alternative is more cost effective and by how much?
Making the part in house
by $
4. What if $18,920 of fixed overhead is rental of equipment used only in production of the component that can be avoided if the
component is purchased? Which alternative is more cost effective and by how much?
Buying the part from the external supplier
✔ by:
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