Xia Co. currently buys a component part for $7 per unit. Xia believes that making the part would require $2.20 per unit of direct materials and $1.05 per unit of direct labor. Xia allocates overhead using a predetermined overhead rate of 225% of direct labor cost Xia estimates an incremental overhead rate of $0.75 per unit to make the part. 1-a. What are the relevant costs for Xia to make or buy the part? (Round your answers to 2 decimal places) Make Buy Per Unit 1-b. Should Xia make or buy the part? O Make O Buy Help
Xia Co. currently buys a component part for $7 per unit. Xia believes that making the part would require $2.20 per unit of direct materials and $1.05 per unit of direct labor. Xia allocates overhead using a predetermined overhead rate of 225% of direct labor cost Xia estimates an incremental overhead rate of $0.75 per unit to make the part. 1-a. What are the relevant costs for Xia to make or buy the part? (Round your answers to 2 decimal places) Make Buy Per Unit 1-b. Should Xia make or buy the part? O Make O Buy Help
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Xia Co. currently buys a component part for $7 per unit. Xia believes that making the part would require $2.20 per unit of direct
materials and $1.05 per unit of direct labor. Xia allocates overhead using a predetermined overhead rate of 225% of direct labor cost
Xia estimates an incremental overhead rate of $0.75 per unit to make the part.
1-a. What are the relevant costs for Xia to make or buy the part? (Round your answers to 2 decimal places)
Make
Buy
Per Unit
1-b. Should Xia make or buy the part?
O Make
O Buy
Help
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