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
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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F14b0ce07-7fa8-4cf8-96b7-0471d4818f09%2F42197c8d-8e6e-4524-bcda-180a28d900e8%2Fm66co0m_processed.jpeg&w=3840&q=75)
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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