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PRESENT ECONOMY
Company manufactured a certain part for use in its assembly operation. Cost per uni units of part is a total of P26.00 from the following: Direct labor is P12.00; Direct n P2.00; fixed factory overhead is P7.00 and variable factory overhead is P5.00. C offered company A 5,000 units for P27.00 per unit. If Company A accepts some of it presently used to manufacture the part could be used to help with the manufacture of saving P40,000.00 in relevant cost in its manufacture and eliminating P3.00 per unit o factory overhead. Find the savings if any from buying instead of making.
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