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Beto Company pays $5.10 per unit to buy a part for one of the products it manufactures. With excess capacity, the company is considering making the part. Making the part would cost $5.10 per unit for direct materials and $1.00 per unit for direct labor. The company normally applies overhead at the predetermined rate of 200% of direct labor cost. Incremental overhead to make the part would be 80% of direct labor cost. (a) Prepare a make or buy analysis of costs for this part. (Enter your answers rounded to 2 decimal places.) (b) Should Beto make or buy the part? (a) Make or Buy Analysis Make Buy Direct materials Direct labor Overhead Cost to buy Cost per unit Cost difference (b) Company should

Beto Company pays $5.10 per unit to buy a part for one of the products it manufactures. With excess capacity, the company is considering making the part. Making the part would cost $5.10 per unit for direct materials and $1.00 per unit for direct labor. The company normally applies overhead at the predetermined rate of 200% of direct labor cost. Incremental overhead to make the part would be 80% of direct labor cost. (a) Prepare a make or buy analysis of costs for this part. (Enter your answers rounded to 2 decimal places.) (b) Should Beto make or buy the part? (a) Make or Buy Analysis Make Buy Direct materials Direct labor Overhead Cost to buy Cost per unit Cost difference (b) Company should

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 2PB: Five Card Draw manufactures and sells 10,000 units of Aces, which retails for $200, and 8,000 units...
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Beto Company pays $5.10 per unit to buy a part for one of the products it manufactures.... 

Beto Company pays $5.10 per unit to buy a part for one of the products it manufactures. With excess capacity, the company is considering making the part. Making the part would cost $5.10 per unit for direct materials and $1.00 per unit for direct labor. The company normally applies overhead at the predetermined rate of 200% of direct labor cost. Incremental overhead to make the part would be 80% of direct labor cost. (a) Prepare a make or buy analysis of costs for this part. (Enter your answers rounded to 2 decimal places.) (b) Should Beto make or buy the part? (a) Make or Buy Analysis Make Buy Direct materials Direct labor Overhead Cost to buy Cost per unit Cost difference (b) Company should:
Transcribed Image Text:Beto Company pays $5.10 per unit to buy a part for one of the products it manufactures. With excess capacity, the company is considering making the part. Making the part would cost $5.10 per unit for direct materials and $1.00 per unit for direct labor. The company normally applies overhead at the predetermined rate of 200% of direct labor cost. Incremental overhead to make the part would be 80% of direct labor cost. (a) Prepare a make or buy analysis of costs for this part. (Enter your answers rounded to 2 decimal places.) (b) Should Beto make or buy the part? (a) Make or Buy Analysis Make Buy Direct materials Direct labor Overhead Cost to buy Cost per unit Cost difference (b) Company should:
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