teich inc, is considering whether to continue to make a component or to buy it...
50.1K
Verified Solution
Link Copied!
Question
Accounting
teich inc, is considering whether to continue to make a component or to buy it from an outside supplier
Teich Inc. is considering whether to continue to make a component or to buy it from an company uses 14,000 of the components each year. The unit product cost of the come company's absorption cost accounting system is given as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead T Unit product cost $9.80 6.80 2.60 4.60 $23.80 Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 35% is a component were bought from the outside supplier, the remainder is not avoidable. In a component uses 3 minutes on the machine that is the company's current constraint. If the bought, time would be freed up for use on another product that requires 6 minutes on th has a contribution margin of $6.20 per unit. When deciding whether to make or buy the component, what cost of making the compor compared to the price of buying the component? (Round your intermediate calculations a decimal places.) O $26.90 O $23.91 O $25.30 O $20 81 Type here to search
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
