Reference no: EM133143202

Question - CBI Products manufactures office desks and is considering buying the desk legs from an outside supplier. CBI Products currently manufactures these legs in its own manufacturing facility. They can buy the desk legs from an outside supplier for $1.44 each. The company uses 250,000 desk legs each year. Information about CBI Products cost to manufacture the 250,000 desk legs is below:

Per Unit

Direct material $.63

Direct labor .13

Variable overhead .50

Fixed overhead .30

Total $1.56

80% of the fixed costs for CBI Products would not change if the company stopped making the desk legs.

Required - Prepare a relevant cost schedule that indicates whether CBI Products should buy the desk legs or continue to make them.