Wehner Company is currently manufacturing Part ABS-43, producing 50,100 units annually. The part is used...
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Accounting
Wehner Company is currently manufacturing Part ABS-43, producing 50,100 units annually. The part is used in the production of several products made by Wehner. The cost per unit for ABS-43 is as follows:
Direct materials
$46.65
Direct labor
9.75
Variable overhead
2.70
Fixed overhead
3.50
Total
$62.60
Of the total fixed overhead assigned to ABS-43, $14,178 is direct fixed overhead (the annual lease cost of machinery used to manufacture Part ABS-43), and the remainder is common fixed overhead. An outside supplier has offered to sell the part to Wehner for $58.96. There is no alternative use for the facilities currently used to produce the part. No significant non-unit-based overhead costs are incurred.
Required:
1. Should Wehner Company make or buy Part ABS-43? Wehner should make OR buy the part. This will produce total cost savings of $______.
2. What is the maximum amount per unit that Wehner would be willing to pay to an outside supplier? Round your answer to the nearest cent. $________per unit
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