(Solved):Haver Company currently produces component RXS for its sole product. The current cost per unit to…

 

Question

Haver Company currently produces component RXS for its sole product. The current cost per unit to manufacture the required 63,000 units of RX5 follows.

Direct materials $5.00
Direct labor 9.00
Overhead 10.00
Total costs per unit 24.00

Direct materials and direct labor are 100% variable. Overhead is 80% fixed. An outside supplier has offered to supply the 63,000 units of RX5 for $20.00 per unit.

Required:

Calculate the incremental costs of making and buying component RX5.

 

EXPERT ANSWER

The

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