Solution-What amount the cost of buying per unit is less

What amount the cost of buying per unit is less than

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Reference no: EM132552714

Canning Vale Machinery Pty Ltd (Canning Vale) is considering two options, i.e., making or buying a part that is used in the manufacturing of its Superpower machine. Below in the table is the information of the annual cost of manufacturing 100,000 parts used by the company.

Direct manufacturing costs - variable costs $300,000

Direct manufacturing costs - fixed costs $100,000

Overhead costs allocated $50,000

Question 1: If Canning Vale were to discontinue production of the part, that would reduce the company's direct fixed manufacturing costs by 70 per cent. Canning Vale should buy the 100,000 parts if the cost of buying per unit is less than what amount?

A. $3.70

B. $3.80

C. $4.50

D. $4.00

Reference no: EM132552714

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What amount the cost of buying per unit is less than

Reference no: EM132552714

Reference no: EM132552714

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