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Posted: June 15th, 2022
Make-or-Buy, Traditional Analysis Wehner Company is currently manufacturing Part
Make-or-Buy, Traditional AnalysisWehner Company is currently manufacturing Part ABS-43, producing 55,000 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 $45.60 Direct Labor 9.80 Variable Overhead 2.75 Fixed Overhead 3.90 TOTAL $62.05Of the total fixed overhead assigned to ABS-43, $15,400 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. 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 – Select your answer -makebuyItem 1 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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