Make or Buy Differential Analysis Cost to purchase tops S 666,000 Costs avoided

Question

Make or Buy Differential Analysis Cost to purchase tops S 666,000 Costs avoided by purchasing tops Direct materials s 390,000 Direct labor 162,000 Variable manufacturing overhead 30,000 30,400 612,400 Fioxed manufacturing overhead s (53,600) Net advantage (disadvantage) to purchase alternative b. Assuming that the production capacity released by purchasing the tops could be devoted to a subcontracting job for another company that netted a contribution margin of $41.600, what maximum purchase price could Allen Corporation pay for the tops? Round answer to two decimal places, if applicable s 392

Explanation / Answer

Calculate maximum price pay off :

Maximum price = 654000/No of units purchased = Maximum price

Note : in this question no of units purchased should be given please fill that

Direct material 390000 DIrect labour 162000 Variable manufacturing overhead 30000 Fixed manufacturing overhead 30400 Opportunity Cost 41600 Total relevant cost of manufacturing 654000

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