A6 Haver Company currently pays an outside supplier $47 per unit for a part for one of its products. Haver is considering two alternativemethods of making the part. Method 1 for making the part would require direct materials of $21 per unit, direct labor of $24 per unit,and incremental overhead of $3 per unit. Method 2 for making the part would require direct materials of $21 per unit, direct labor of$18 per unit, and incremental overhead of $7 per unit.Required:1. Compute the cost per unit for each alternative method of making the part.2. Should Haver make or buy the part? If Haver makes the part, which production method should it use?Complete this question by entering your answers in the tabs below.Required 1 Required 2Should Haver make or buy the part? If Haver makes the part, which production method should it use?Should Haver make or buy the part?If Haver makes the part, which production method should it use?< Required 1Required 2 >

MAKE OR BUY DECISION The make-or-buy decision is choosing between manufacturing a product within a…

Haver Company currently pays an outside supplier $47 per unit for a part for one of its products. Haver is considering two alternative methods of making the part. Method 1 for making the part would require direct materials of $21 per unit, direct labor of $24 per unit, and incremental overhead of $3 per unit. Method 2 for making the part would require direct materials of $21 per unit, direct labor of $18 per unit, and incremental overhead of $7 per unit.

Haver Company currently pays an outside supplier $47 per unit for a part for one of its products. Haver is considering two alternative methods of making the part. Method 1 for making the part would require direct materials of $21 per unit, direct labor of $24 per unit, and incremental overhead of $3 per unit. Method 2 for making the part would require direct materials of $21 per unit, direct labor of $18 per unit, and incremental overhead of $7 per unit.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 3CE: Patz Company produces two types of machine parts: Part A and Part B, with unit contribution margins...

See similar textbooks

Similar questions

Beto Company pays $6.90 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 $7.80 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 Direct materials Direct labor Overhead Cost to buy Cost per unit Cost difference (b) Company should: Make Buy
Haver Company currently pays an outside supplier $15 per unit for a part for one of its products. Haver is considering two alternative methods of making the part. Method 1 for making the part would require direct materials of $5 per unit, direct labor of $8 per unit, and ncremental overhead of $3 per unit. Method 2 for making the part would require direct materials of $5 per unit, direct labor of $2 per unit, and incremental overhead of $7 per unit. Required: 1. Compute the cost per unit for each alternative method of making the part. 2. Should Haver make or buy the part? If Haver makes the part, which production method should it use? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the cost per unit for each alternative method of making the part. Make with Method Make with 1 Method 2 Cost per unit Cost per unit Required t Buy Required 2 >
Beto Company pays $3.10 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 $2.10 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:
Xia Co. currently buys a component part for $5 per unit. Xia believes that making the part would require $2.25 per unit of direct materials and $1.00 per unit of direct labor. Xia allocates overhead using a predetermined overhead rate of 200% of direct labor cost. Xia estimates an incremental overhead rate of $0.75 per unit to make the part. Should Xia make or buy the part?
Xia Co. currently buys a component part for $5 per unit. Xia believes that making the part would require $2.25 per unit of direct materials and $1.00 per unit of direct labor. Xia allocates overhead using a predetermined over head rate of 200% of direct labor cost. Xia estimates an incremental overhead rate of $0.75 per unit to make the part. Should Xia make or buy the part?
A company currently pays $5 per unit to buy a key part for a product it manufactures. It can make the part for $1.50 per unit for direct materials and $2.50 per unit for direct labor. The company normally allocates overhead costs at the rate of 50% of direct labor. Incremental overhead costs to make this part are $0.75 per unit. Should the company make or buy the part?
Factor Company estimates that producing a unit of product would require $8 per unit of direct materials and $24 per unit of direct labor. Factor Company normally applies overhead using a predetermined overhead rate of 150% of direct labor cost. Factor Company estimates incremental overhead of $16 per unit of product. An outside supplier offers to provide Factor Company with all the units it needs at a price of $46 per unit. Factor Company should choose to: Multiple Choice O O O Buy since the relevant cost to make it is $56. Make since the relevant cost to make it is $48. Buy since the relevant cost to make it is $48. Make since the relevant cost to make it is $32. Buy since the relevant cost to make it is $32.
Rough N' Tough (RNT) manufactures outdoors accessories. Management is considering producing the poles for their tents rather than continuing to purchase from their current supplier. The supplier charges $60 per set of poles.The cost accounting team has estimated that RNT would incur the following costs if they were to produce the poles instead: $40 per set for direct materials, $10 per set for direct labor, $7 per set for variable overhead, and $20 per set for fixed overhead application.RNT currently has unused production capacity and manufacturing equipment that could be used to manufacture the poles. RNT has planned to sell 5,000 tents this year. What would the change in overall cost be for the company if RNT produced the poles rather than purchasing them?
Two alternatives are under consideration for a tapered fastening pin. Either design will serve the purpose and will involve the same material and manufacturing cost except for the lathe and grinder operations. Design A will require 16 hours of lathe time and 4.5 hours of grinder time per 1,000 units. Design B will require 7 hours of lathe time and 12 hours of grinder time per 1,000 units. The operating cost of the lathe including labor is ₱200 per hour. The operating cost of the grinder including labor is ₱150per hour. Which design should be adopted if 100,000 units are required per year and what is the economic advantage of the best alternative?
In its production process, Purple Tree Inc uses a specialized part in the manufacturing of their fancy widget. The costs to make a part are: direct material, $15; direct labor, $27; variable overhead, $15; and applied fixed overhead, $32. Purple Tree has received a quote of $60 from a potential supplier for this part. If Purple Tree buys the part, 75 percent of the applied fixed overhead would continue. They need 12,000 units of the specialized part. Purple Tree Company would be better off by Group of answer choices $60,000 to buy the part. $348,000 to buy the part. $30,000 to manufacture the part. $216,000 to manufacture the part.
Dartmouth Corporation manufactures two models of office chairs, a standard and a deluxe model. Number of setups and number of components are identified as activity-cost drivers for overhead. The standard model requires 19 setups and 9 components. The standard model's overhead costs are $50,000. The deluxe model requires 31 setups and 18 components. The deluxe model's overhead costs are $102,600. Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the standard model?
Use the information provided to calculate standard costs: To make one switch it takes 18 feet of plastic-coated copper wire and 0.6 pounds of plastic material. The plastic material can usually be purchased for $16 per pound, and the wire costs $2.09 per foot. The labor necessary to assemble a switch consists of two types. The first type of labor is assembly, which takes 3.5 hours. These workers are paid $27 per hour. The second type of labor is finishing, which takes 2.7 hours. These workers are paid $27 per hour. Overhead is applied using labor hours. The variable overhead rate is $14.46 per labor hour. The fixed overhead rate is $14.72 per hour. What is the total standard cost? Round to the nearest penny, two decimal places.