MakeorBuy, Traditional Analysis
Wehner Company is currently manufacturing Part ABS producing units annually. The part is used in the production of several products made
by Wehner. The cost per unit for ABS is as follows:
Of the total fixed overhead assigned to ABS $ is direct fixed overhead the annual lease cost of machinery used to manufacture Part ABS
and the remainder is common fixed overhead. An outside supplier has offered to sell the part to Wehner for $ There is no alternative use for
the facilities currently used to produce the part. No significant nonunitbased overhead costs are incurred.
Required:
Should Wehner Company make or buy Part ABS
Wehner should
the part. This will produce total cost savings of $
What is the maximum amount per unit that Wehner would be willing to pay to an outside supplier? Round your answer to the nearest cent.
$
per unit
