Please clearly break down this question for me using an excel sheet if possible.
ID: 2491453 • Letter: P
Question
Please clearly break down this question for me using an excel sheet if possible. I would like to see how to work this problem for future reference, thank you so much in advance! :)
Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 69,000 units of RX5 follows. Direct materials Direct labor Overhead $ 4.00 8.00 9.00 Total costs per unit $21.00 Direct materials and direct labor are 100% variable. Overhead is 80% fixed. An outside supplier has offered to supply the 69,000 units of RX5 for $18.00 per unit. Required: 1. Calculate the incremental costs of making and buying component RS. Total incremental costs of: Making the units Buying the units Total direct materials Total direct labor Variable overhead costs Total costs Should the company continue to manufacture the part, or should it buy the part from the outside supplier?Explanation / Answer
Making The Unit Buying The Units Total Direct Material Cost =4*69000 276000 0 Total Direct Labor Cost =8*69000 552000 0 Variable Overhead Costs =9*0.2*69000 124200 0 Cost Of purchase of material 69000*18 1242000 Total Cost 952200 1242000 Company Should Make the Unit 289800