Should vaughn make or buy the wickets

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Question - Vaughn Manufacturing currently manufactures a wicket as its main product. The costs per unit are as follows:

Direct materials and direct labor $14

Variable overhead 5

Fixed overhead 8

Total $27

Saran Company has contacted Vaughn with an offer to sell it 4300 of the wickets for $21 each. If Vaughn makes the wickets, variable costs are $19 per unit. Fixed costs are $8 per unit; however, $5 per unit is unavoidable. Should Vaughn make or buy the wickets?

Buy; savings = $12900

Make; savings = $8600

Make; savings = $4300

Buy; savings = $4300

Reference no: EM133149675

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