Wehner Company is currently manufacturing Part ABS-43, producing 53,300 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 $45.65 Direct labor 8.10 Variable overhead 2.05 Fixed overhead 4.40 Total $60.20 Of the total fixed overhead assigned to ABS-43, $11,406 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 $55.62. 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 buy 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
Wehner Company is currently manufacturing Part ABS-43, producing 53,300 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 | $45.65 |
| Direct labor | 8.10 |
| Variable |
2.05 |
| Fixed overhead | 4.40 |
| Total | $60.20 |
Of the total fixed overhead assigned to ABS-43, $11,406 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 $55.62. 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 buy 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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