Reference no: EM13597350

My company uses a certain part in its manufacturing process that it buys from an outside supplier for $29 per part plus another $4 for shipping and other purchasing-related costs. The company will need 14,400 of these parts in the next year and is considering making the part internally. After performing a capacity analysis, my company has determined that it has sufficient unused capacity to manufacture the 14,400 parts but would need to hire a manager at an annual salary of $43,200 to oversee this production activity. The estimated production costs are determined to be:

Direct material                                                           $18

Direct labor                                                                $8

Variable overhead                                                       $4

Fixed overhead (includes manage at $3 per unit)          $7

Identify the relevant costs to make the part internally.