Question

Kingston Company, which needs 10,000 units of a certain part to be used in its production cycle, can make or buy the part. If Kingston buys the part from Utica Company, Kingston could not use the released facilities in another manufacturing activity within the coming year. 60% of the fixed overhead applied will continue regardless of which decision option is chosen. The following per-unit cost information to make the part by Kingston is available: Direct materials $37 Direct labor $148 Variable overhead $74 Fixed overhead applied $93 Total cost to make the part by Kingston is $352. Cost to buy the part from Utica Company is $85. In deciding whether to make or buy the part, Kingston's total relevant cost to make the part would be:

          Kingston Company, which needs 10,000 units of a certain part to be used in its production cycle, can make or buy the part. If Kingston buys the part from Utica Company, Kingston could not use the released facilities in another manufacturing activity within the coming year. 60% of the fixed overhead applied will continue regardless of which decision option is chosen. The following per-unit cost information to make the part by Kingston is available: 
Direct materials $37 
Direct labor $148 
Variable overhead $74 
Fixed overhead applied $93 
Total cost to make the part by Kingston is $352. 
Cost to buy the part from Utica Company is $85. 
In deciding whether to make or buy the part, Kingston's total relevant cost to make the part would be:

Added by Harold R.

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