help... newnnect.mheduca Test 3 Help Save & Xia Co. currently buys a component p

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help...

newnnect.mheduca Test 3 Help Save & Xia Co. currently buys a component part for $6 per unit Xia believes that making the part woulkd require $215 per unit of direct materials and $110 per unit of drect labor Xia allocates overhead usng a predetermined overhead rate of 210%of direct labor cost. Xia estimates an incremental averhead rate of $0 75 per unit to make the part 1-n. What are the relevant costs for Xia to make or buy the part? (Round your enswers to 2 decimal places.) t Uni Make Buy 1-b. Should Xia make or buy the part? Make Buy Prev 11 of 11 e@o. ??1al

Explanation / Answer

1a. Relevant cost to make or buy the product is:

Cost to buy the product is $6 per unit.

Cost to make product is:

Direct Material $2.15

Direct labour $1.10

Overhead (210%*1.1) $2.31

Incremental overhead rate 0.75

Total cost to make product is $6.31

1b. Xia should buy the product.

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