Outside-is-Cold Inc. must decide whether to make or buy the lining used in its winter...
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Outside-is-Cold Inc. must decide whether to make or buy the lining used in its winter coats. The cost of producing 60,000 linings for its winter coats are as follows. Per Unit Total Direct materials $0.50 $30,000 Direct labour 0.70 42,000 Variable overhead 0.75 45,000 Fixed overhead 1.00 60,000 Total $2.95 $177,000 The company has an opportunity to buy the lining from an outside supplier at $2.75 per lining. If the company purchases the lining, all the variable costs and one third of the fixed costs will be eliminated
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