anment of Business - Minnesota State Uni... X C CengageNOWV2 Online teaching and learning resource...
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anment of Business - Minnesota State Uni... X C CengageNOWV2 Online teaching and learning resource from Cengage Lear.. eBook Show Me How Make-or-Buy Decision Zlon Manufacturing had always made its components in-house. However, Bryce Component Works had recently offered to supply one component, K2, at a price of $12 each. Zion uses 4,500 units of Component K2 each year. The cost per unit of this component is as follows: Direct materials $7.44 Direct labor 2.96 Variable overhead 1.13 Fixed overhead 3.00 Total $14.53 The fixed overhead is an allocated expense; none of it would be eliminated if production of Component K2 stopped. Required: 1. What are the alternatives facing Zion Manufacturing with respect to production of Component K2? 2. List the relevant costs for each alternative. If required, round your answers to the nearest cent. Total Relevant Cost Make per unit Buy per unit Differential Cost to Make per unit If Zion decides to purchase the component from Bryce, by how much will operating income increase or decrease? 3. Conceptual Connection: Which alternative is better? Check My Work 3 more Check My Work uses remaining Previous Next All work saved. Save and Eat Submit Assignment for Grading
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