What would be the net saving or costs to outsource

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The Radial Tyre manufacturing company currently makes inner mesh for use in finished tyres. It requires 3,000 of inner mesh each month. NuSteel has offered to provide inner mesh for $33 per unit. If the mesh was outsourced there would be savings in Fixed Overhead of $5,000 per month. Radial Tyres costs per unit are:

Materials - $10 per unit

Direct Labour - $15 per unit

Variable Overheads - $12 per unit

Allocated Fixed Overhead - $6 per unit

What would be the net saving or costs to outsource to NuSteel?

Reference no: EM131258910

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