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Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 54,000 units of RX5 follows. Direct materials $ 4.00 Direct labor 8.00 Overhead 9.00 Total costs per unit $ 21.00 Direct materials and direct labor are 100% variable. Overhead is 70% fixed. An outside supplier has offered to supply the 54,000 units of RX5 for $19.00 per unit.
Calculate the per unit incremental costs of making and buying component RX5. Find the variable overhead costs, total direct materials, total direct labor, and costs to buy the units.
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