ACCT 6010-Will Company assembles products from a group

by | Mar 18, 2020 | Uncategorized

  

Will Company assembles products from a group of interconnecting parts. The company produces some of the parts and buys some from outside vendors. The vendor for Part X has just increased it price by 35 percent, to $10 per unit for the first 5,000 units and $9 per additional units ordered each year. The company uses 7,500 units of Part X each year. unit costs if the company makes the part are as follows.

Direct materials $3.50

Direct labor 2.00

Variable overhead 4.00

Variable selling costs for the assembled product 3.75

Should Will Company continue to purchase Part X or begin making it?

  

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