Make production cost less than purchase cost

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Reference no: EM132152990

The labor cost to produce a certain widget is $8.50 per hour. Job setup costs $50 and material cost is $20 per widget. The widget can be simply purchased from a third-party OEM supplier for $88.50 per widget. Overhead is charged at a rate of 50% of labor, materials, and set-up costs.

a. Determine the unit cost for a production run of 20 widgets if the first widget took 5 hours to produce.

b. What is the minimum production run necessary to make production cost less than purchase cost?

Reference no: EM132152990

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