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Should hart company make or buy the part

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Reference no: EM132581358

Hart Company produces a part that is used in the manufacture of one of its products. The costs associated with the production of 5,000 units of this part are as follows:

Direct materials $120,000

Direct labor 170,000

Variable factory overhead 75,000

Fixed factory overhead 160,000

Total costs $525,000

Question 1: Of the fixed factory overhead costs, $70,000 are avoidable. Hart Company has offered to sell 5,000 units of the same part to Hart for $86.50 per unit. Assuming there is no other use for the facilities, should Hart Company make or buy the part?

Reference no: EM132581358

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