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Question - Kando Company currently pays $10 per unit to buy a part for a product it manufactures. Instead, Kando could make the part for per unit costs of $4 for direct materials, $3 for direct labor, and $1 for incremental overhead. Kando normally applies overhead costs using a predetermined rate of 200% of direct labor cost.
Required -
(a) Prepare a make or buy analysis of costs for this part.
(b) Should Kando make or buy the part?
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