Kadhim Co. manufactures product B which is a part of its main product. Kadhim Co...
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Accounting
Kadhim Co. manufactures product B which is a part of its main product. Kadhim Co makes 50,000 units of product B per year. The production costs are detailed below. An outside supplier has offered to supply 50,000 units of product B per year at $ 2.45 each. Fixed production cost of $ 40,000 associated with the product B are unavoidable. Should Kadhim Co make or buy the product B?
The production cost per unit for manufacturing a unit of product B are:
Direct Materials
0.85
Direct Labor
0.65
Variable Manufacturing Overhead
0.40
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