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We Make Company has traditionally manufactured a number of different standard machine parts. It is now exploring an outsourcing decision for several of the parts that it currently produces. Cost information for one such machine part is given below: Variable cost/unit Fixed manufacturing costs (total1) Allocated corporate overhead 32.00 4,180.00 6,440.00 Unit product cost (based on 500 units) 53.24 Fifty percent of the fixed manufacturing costs are directly traceable to this specific machine part and therefore avoidable. An outside supplier will sell the part at a price of $58 per unit if 500 units are purchased. Required: Prepare an analysis whether We Make should continue to manufacture this machine part or whether it should purchase it from the outside supplier (Negative amounts should be indicated by a minus sign. Round "Per Unit" to 2 decimal places.) 500 Units Per Unit Make Buy Difference Purchase Variable cost Fixed manufacturing overhead Common costs Total costs

We Make Company has traditionally manufactured a number of different standard machine parts. It is now exploring an outsourcing decision for several of the parts that it currently produces. Cost information for one such machine part is given below: Variable cost/unit Fixed manufacturing costs (total1) Allocated corporate overhead 32.00 4,180.00 6,440.00 Unit product cost (based on 500 units) 53.24 Fifty percent of the fixed manufacturing costs are directly traceable to this specific machine part and therefore avoidable. An outside supplier will sell the part at a price of $58 per unit if 500 units are purchased. Required: Prepare an analysis whether We Make should continue to manufacture this machine part or whether it should purchase it from the outside supplier (Negative amounts should be indicated by a minus sign. Round "Per Unit" to 2 decimal places.) 500 Units Per Unit Make Buy Difference Purchase Variable cost Fixed manufacturing overhead Common costs Total costs

FINANCIAL ACCOUNTING
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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We Make Company has traditionally manufactured a number of different standard machine parts. It is now exploring an outsourcing decision for several of the parts that it currently produces. Cost information for one such machine part is given below: Variable cost/unit Fixed manufacturing costs (total) Allocated corporate overhead 24 4,180.00 6,440.00 32.00 Unit product cost (based on 500 units) 53.24 Fifty percent of the fixed manufacturing costs are directly traceable to this specific machine part and therefore avoidable. An outside supplier will sell the part at a price of $58 per unit if 500 units are purchased. Required: Prepare an analysis whether We Make should continue to manufacture this machine part or whether it should purchase it from the outside supplier (Negative amounts should be indicated by a minus sign. Round "Per Unit" to 2 decimal places.) 500 Units Per Unit Make Buy Difference Purchase Variable cost Fixed manufacturing overhead Common costs Total costs
Transcribed Image Text:We Make Company has traditionally manufactured a number of different standard machine parts. It is now exploring an outsourcing decision for several of the parts that it currently produces. Cost information for one such machine part is given below: Variable cost/unit Fixed manufacturing costs (total) Allocated corporate overhead 24 4,180.00 6,440.00 32.00 Unit product cost (based on 500 units) 53.24 Fifty percent of the fixed manufacturing costs are directly traceable to this specific machine part and therefore avoidable. An outside supplier will sell the part at a price of $58 per unit if 500 units are purchased. Required: Prepare an analysis whether We Make should continue to manufacture this machine part or whether it should purchase it from the outside supplier (Negative amounts should be indicated by a minus sign. Round "Per Unit" to 2 decimal places.) 500 Units Per Unit Make Buy Difference Purchase Variable cost Fixed manufacturing overhead Common costs Total costs
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