Kando Company currently pays $14 per unit to buy a part for a product it manufactures. Instead, Kando could make the part for per unit costs of $6 for direct materials, $4 for direct labor, and $2 for incremental overhead. Kando normally applies overhead costs using a predetermined rate of 200% of direct labor cost. (a) Prepare a make or buy analysis of costs for this part. (b) Should Kando make or buy the part? Direct materials Direct labor Overhead Cost to buy Cost per unit Company should: Make Buy
Kando Company currently pays $14 per unit to buy a part for a product it manufactures. Instead, Kando could make the part for per unit costs of $6 for direct materials, $4 for direct labor, and $2 for incremental overhead. Kando normally applies overhead costs using a predetermined rate of 200% of direct labor cost. (a) Prepare a make or buy analysis of costs for this part. (b) Should Kando make or buy the part? Direct materials Direct labor Overhead Cost to buy Cost per unit Company should: Make Buy
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 14EA: Cool Pool has these costs associated with production of 20,000 units of accessory products: direct...
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