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Relevant cost

The following standard costs pertain to a component part manufactured by Bor Company:
Direct materials $ 2
Direct labor 14
Manufacturing overhead 50
Standard cost per unit $66

An outside supplier has offered to supply all of the parts needed by Bor Company for $50 each. The 50% of the manufacturing overhead cost that is fixed would be unaffected by this decision. In the decision to "make or buy," what is the relevant unit cost to make the part internally?

$41

$49

$33

$53

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Solution Summary

The solution explains how to determine the relevant costs if the part is made internally

$2.19