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Make or Buy Eggers Company needs 22,000 units of a part to use in producing one of its products. If Eggers buys the part from McMillan Company for $100 instead of making it,

Make or Buy Eggers Company needs 22,000 units of a part to use in producing one of its products. If Eggers buys the part from McMillan Company for $100 instead of making it, Eggers will not use the released facilities in another manufacturing activity. Forty percent of the fixed overhead will continue irrespective of CEO Donald Mickey’s decision. The cost data are

 
   

Cost to make the part:

 

Direct materials

$32

Direct labor

13

Variable overhead

21

Fixed overhead

40

   
 

$106

   
 

 

Required:

Determine which alternative is more attractive to Eggers and by what amount.

Jul 22 2021 View more View Less

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