Factor Co. can produce a unit of product for the following costs: Direct material $ 7.80 Direct labor 23.80 Overhead 39.00 Total product cost per unit $ 70.60 An outside supplier offers to provide Factor with all the units it needs at $45.20 per unit. If Factor buys from the supplier, the company will still incur 60% of its overhead. Factor should choose to:

Buying option

Explanation:

In this question we compare the buying cost and the making cost

The buying cost comprise of

= Direct material per unit + Direct labor per unit + overhead per unit × remaining percentage

= $7.80 + $23.80 + $39 × 40%

= $7.80 + $23.80 + $15.60

= $47.20

And, the buying cost is $45.20

Based on these two cost, the Factor should use the buying cost as it is less than the making cost

lbc corporation makes and sells a product called product wz. each unit of product wz requires 4.1 hours of direct labor at the rate of $20.00 per direct labor-hour. management would like you to prepare a direct labor budget for june. the company plans to sell 28,000 units of product wz in june. the finished goods inventories o