Solution-Should the X make Part A or buy it from Y

Should the X make Part A or buy it from Y

Assignment Help Cost Accounting

Reference no: EM132940945

Problem - X Company uses 30 units of Part A per month in the production of its main product. The manufacturing cost per unit of Part A are as follows:

Material P2,000

Handling costs 200

Direct Labor 10,000

Factory Overhead (40% fixed) 20,000

Total P32,200

Handling cost is applied at 10% of cost of direct materials and/or any purchased parts. Y Company, a producer of Part A has offered to supply the part for X at P 24,000 per unit. If X accepts Y's offer, the resulting idle facility may be used to produce another product which is expected to earn P 100,000 per month.

Required - Should the X make Part A or buy it from Y?

Reference no: EM132940945

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Should the X make Part A or buy it from Y

Reference no: EM132940945

Reference no: EM132940945

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