Edidas Company needs 20,000 units of Part GX to use in producing one of its products. If Edidas buys the Part GX from McMillan Company for $79 instead of making it, Edidas will not use the released facilities in another manufacturing activity. Twenty percent of the fixed overhead will continue irrespective of CEO Donald Mickey's decision. The cost per unit data are as follows: Cost to make the part Direct Materials Direct Labor Variable Overhead Fixed Overhead (S) 30 15 20 20 85 Required : 1. Explain which alternative is more attractive to Edidas, make or buy Part GX. 2. Assume there is new information that Edidas is negotiating to purchase cheaper raw materials from supplier (Twenty percent lower price). Is this information relevant or irrelevant? On the basis of financial considerations alone, should Edidas make or buy Part GX? Show your calculations 3. Based on requirement 2, what are relevant qualitative factors that Edidas should consider to decide whether to make or buy Part GX? (at least one factor for each decision [Make or Buy])

Edidas Company needs 20,000 units of Part GX to use in producing one of its products. If Edidas buys the Part GX from McMillan Company for $79 instead of making it, Edidas will not use the released facilities in another manufacturing activity. Twenty percent of the fixed overhead will continue irrespective of CEO Donald Mickey’s decision. The cost per unit data are as follows:Cost to make the part        ($)Direct Materials                 30Direct Labor                      15Variable Overhead            20Fixed Overhead                20                                         85 Required1. Explain which alternative is more attractive to Edidas, make or buy Part GX. 2. Assume there is new information that Edidas is negotiating to purchase cheaper raw materials from supplier (Twenty percent lower price). Is this information relevant or irrelevant?  On the basis of financial considerations alone, should Edidas make or buy Part GX? Show your calculations3. Based on requirement 2, what…

Wilma Company must decide whether to make or buy some of its components. The costs of producing 60,000 switches for its generators are as follows. Direct materials   $30,000   Variable overhead   $45,000   Direct labor   $42,000   Fixed overhead   $60,000   Instead of making the switches at an average cost of $2.95 ($177,000 ÷ 60,000), the company has an opportunity to buy the switches at $2.7 per unit. If the company purchases the switches, all the variable costs and one-fourth of the fixed costs will be eliminated. (a)     Prepare an incremental analysis showing whether the company should make or buy the switches. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)     Make   Buy   Net IncomeIncrease (Decrease)   Direct materials   $   $   $   Direct labor               Variable manufacturing costs               Fixed manufacturing costs               Purchase price               Total…

Sardi Incorporated is considering whether to continue to make a component or to buy it from an outside supplier. The company uses 12,600 of the components each year. The unit product cost of the component according to the company's cost accounting system is given as follows:   Direct materials $ 8.40 Direct labor 5.40 Variable manufacturing overhead 1.20 Fixed manufacturing overhead 3.20 Unit product cost $ 18.20   Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 35% is avoidable if the component were bought from the outside supplier. In addition, making the component uses 1 minutes on the machine that is the company's current constraint. If the component were bought, time would be freed up for use on another product that requires 2 minutes on this machine and that has a contribution margin of $4.80 per unit. When deciding whether to make or buy the component, what cost of making the component should be compared to the price of buying the…