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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

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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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
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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