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Should xia make or buy the part

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Reference no: EM132593861

Xia Co. currently buys a component part for $8 per unit. Xia believes that making the part would require $4.20 per unit of direct materials and $1.10 per unit of direct labor. Xia allocates overhead using a predetermined overhead rate of 215% of direct labor cost. Xia estimates an incremental overhead rate of $0.70 per unit to make the part.

Question 1-a. What are the relevant costs for Xia to make or buy the part? (Round your answers to 2 decimal places.)

Question 1-b. Should Xia make or buy the part?

Reference no: EM132593861

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