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How much cost can they avoid

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Question - Company A needs to know if they should buy a product for $50 or continue to make the product. They need 10650 units for a job- and they think 60% of Fixed overhead will continue regardless of which choice.

It currently costs the following to make the product: Direct material per unit is $5, Direct labor is $20, Variable overhead is $9, Fixed overhead is $12. They don't think they can use this facility for any other purpose in the future. How much cost can they avoid if they stop making it and start buying it?

Reference no: EM132503990

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