Given Information:
Per Unit 15,000 Units Per Year Direct materials $ 9 $135,000
Direct labor 11 165,000
Variable manufacturing overhead 2 30,000
Fixed manufacturing overhead, traceable 6* 90,000
Fixed manufacturing overhead, allocated 13 195,000
Total cost $41 $615,000
Solution:
Compute the total cost of making and buying the parts:
Make Buy
Cost of purchasing 0 525,000
(15,000*35)
Direct materials 135,000 0
Direct Labour 165000 0
Variable manufacturing overhead 30,000 0
Fixed manufacturing overhead 57240 0
-----------------------------------------------
Total Relevant cost 387,240 525,000
