Reference no: EM132620195

Assume the following cost data relate to the decision to produce

Total units expected to be produced or bought from the market = 10,000

                                        Total Costs                    Unit Cost

Direct materials                       20,000                       2.00

Direct labor                             25,000                       2.50

Variable overhead                      15,000                      1.50

Fixed overhead (avoidable)            24000                     2.40

Fixed overhead (no-avoidable)             26,000                2.60

Purchase cost                                61,000                  $6.10

Question 1: Should the company acquire the product form the market?

a. Yes

b. No

c. Indifferent to to make or to buy

d. Yes if the market price per unit less than $4.50