Hart company currently produces a component that it uses in

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Hart Company currently produces a component that it uses in making some of its products. Hart has calculated the following costs for making the part:


Unit-level costs
Materials                                    $20
Labor                                           28
Overhead                                      2
Allocated facility-level costs             10
Total cost                                   $60

Hart is considering outsourcing the component. A supplier has offered to sell the component to Hart for $54 each. Hart needs 10,000 units each year.

Required:Should Hart outsource the component? Support your answer with appropriate computations.

Reference no: EM13609992

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