Timer Notes . Evaluate-Feedback -Print Info think they will need 3,500 units. Es

Question

Timer Notes . Evaluate-Feedback -Print Info think they will need 3,500 units. Estimated costs to make the part are: Direct materials Direct labor Variable overhead Fixed overhead Total Per-Unit 3.22 3.64 4.10 3.80 $14.76 Total $9,660 10,920 2,300 11,400 $44,280 Of the estimated fixed factory space for $2,600; it will have to use this space to make the part. If X Company continues to buy the part instead of making it, it will save overhead, $5,358 are common costs that would be allocated to the part; the rest would be additional fixed overhead costs. X Company currently rents unused Suomit Arewer Tries 0/5

Explanation / Answer

CALCUALTION OF COST OF MAKING THE PRODUCT INSIDE THE FACTORY Particulars Amount Total Unit   Total Cost Remarks Direct Materials                        3.22           3,500.00         11,270.00 Variable Cost Direct Labours                        3.64           3,500.00         12,740.00 Variable Cost Vraible Overhead                        4.10           3,500.00         14,350.00 Variable Cost Fixed Overhead as Opportunity Cost                          2.47           3,500.00            8,642.00 Opportunity Cost ($ 8,642 / 3500 Units) Total Cost per unit                      13.43 Per unit Cost         47,002.00 CALCULATION OF THE COST OF SAVING ON PURHCASES Total Cost of Manufacture=                      13.43 Per unit Cost Less: Purchasing Price =                      13.38 Per unit Purchase Price Save per unit if they continue to buy                        0.05 Saving Per unit Total Units required for Purchase                3,500.00 units Total Saving =                   172.00 CALCULATION OF TOTAL RELATED FIXED COST Total Fixed Cost =             11,400.00 Less: Common Cost =                5,358.00 Add: Opportunity Cost =                2,600.00 Total Fixed Cost =                8,642.00 Total Expected units to be produced =                3,500.00 units Cost per unit =                        2.47 Answer If contiinue to buy the parts instead of making it then they will save = $ 172

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