Business, 31.08.2020 03:01, deadpoolcorvettehats

2.Assume that ABC Company currently manufacture cylinders and the costs incurred to make one cylinder unit are as follows: Direct material …….. $24
Variable overhead ……$10
Direct labor …………$16
Fixed overhead ………….$10
of the per-unit fixed overhead, $4 could be avoided if ABC did not make the cylinders. Another company has offered to sell to ABC an equivalent cylinder for $56. ABC produces 20,000 cylinders annually.
Requirements:
A) Should ABC buy or make the cylinders?
B) ABC’s vice president estimates that the company can rent out the facilities used to make the cylinders for $70,000 annually. Should ABC buy or make the cylinders?

Answers: 3

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2.Assume that ABC Company currently manufacture cylinders and the costs incurred to make one cylinde...