Make-or-Buy, Traditional Analysis Wehner Company is currently manufacturing Part ABS-43, producing 59,400 units annually. The part is used in the production of several products made by Wehner. The cost per unit for ABS-43 is as follows: Direct materials $44.35 Direct labor 9.45 Variable overhead 2.50 Fixed overhead 3.65     Total $59.95 Of the total fixed overhead assigned to ABS-43, $11,939 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 $56.14. 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     the part. This will produce total cost savings of $ 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. $ per unit

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Make-or-Buy, Traditional Analysis

Wehner Company is currently manufacturing Part ABS-43, producing 59,400 units annually. The part is used in the production of several products made by Wehner. The cost per unit for ABS-43 is as follows:

Direct materials $44.35
Direct labor 9.45
Variable overhead 2.50
Fixed overhead 3.65
    Total $59.95

Of the total fixed overhead assigned to ABS-43, $11,939 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 $56.14. 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 

 

 the part. This will produce total cost savings of $

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.
$ per unit

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