Hart Company currently produces a component that it uses in making some of its p

Question

Hart Company currently produces a component that it uses in making some of its products. Hart has calculated the following costs for making the part:

Unit-level costs
Materials                                    $20
Labor                                           28
Overhead                                       2
Allocated facility-level costs           10
Total cost                                    $60


Hart is considering outsourcing the component. A supplier has offered to sell the component to Hart for $54 each. Hart needs 10,000 units each year.

Required:
Should Hart outsource the component? Support your answer with appropriate computations.

Explanation / Answer

the company is-----= 4 dollars per unit ($ 40,000 total ) better off make the component

HART SHOULD NOT OUTSOURCE THE COMPONENT

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