Xia Co. currently buys a component part for $9 per unit. Xia believes that making the part would require $4.45 per unit of direct materials and $1.05 per unit of direct labor. Xia allocates overhead using a predetermined overhead rate of 220% of direct labor cost Xia estimates an incremental overhead rate of $0.50 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

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Xia Co. currently buys a component part for $9 per unit. Xia belleves that making the part would require $4.45 per unit of direct
materials and $1.05 per unit of direct labor. Xia allocates overhead using a predetermined overhead rate of 220% of direct labor cost.
Xia estimates an incremental overhead rate of $0.50 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
Transcribed Image Text:Xia Co. currently buys a component part for $9 per unit. Xia belleves that making the part would require $4.45 per unit of direct materials and $1.05 per unit of direct labor. Xia allocates overhead using a predetermined overhead rate of 220% of direct labor cost. Xia estimates an incremental overhead rate of $0.50 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
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