Business, 27.03.2020 03:08 annnoe5128abc

Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 40% is avoidable if the component were bought from the outside supplier. In addition, making the component uses 4 minutes on the machine that is the company's current constraint. If the component were bought, time would be freed up for use on another product that requires 8 minutes on this machine and that has a contribution margin of $6.30 per unit. When deciding whether to make or buy the component, what cost of making the component should be compared to the price of buying the component

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Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 40% is avoidable i...