Answered

Westonci.ca offers fast, accurate answers to your questions. Join our community and get the insights you need now. Get detailed and accurate answers to your questions from a dedicated community of experts on our Q&A platform. Get precise and detailed answers to your questions from a knowledgeable community of experts on our Q&A platform.

Xia Co. currently buys a component part for $5 per unit. Xia believes that making the part would require $2.25 per unit of direct materials and $1.00 per unit of direct labor. Xia allocates overhead using a predetermined overhead rate of 200% of direct labor cost. Xia estimates an incremental overhead rate of $0.75 per unit to make the part. 1-a. What are the relevant costs for Xia to make or buy the part

Sagot :

Answer and Explanation:

The computation is shown below:

The relevant costs for Xia Co. to make or buy the part is  

Direct materials         $2.25

Direct labor                   1.00

Incremental overhead 0.75

Total relevant cost   $4.00

And, the relevant cost of buying a component is $5

So here the less cost would  be considered

Therefore the component should make as it saves $1 per unit

The same would be considered and relevant too

Thank you for choosing our service. We're dedicated to providing the best answers for all your questions. Visit us again. Thanks for stopping by. We strive to provide the best answers for all your questions. See you again soon. Thank you for visiting Westonci.ca, your go-to source for reliable answers. Come back soon for more expert insights.