The required volume of output to produce the motors will

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Green Company uses Part JR3 in manufacturing its products. It has always purchased this from a supplier for $40 each. It recently upgraded its own manufacturing capabilities and has enough excess capacity (including trained workers) to begin manufacturing Part JR3 instead of buying it. The company prepared the following cost projections of making the part, assuming that overhead is allocated to the part at the normal predetermined overhead rate of 200% of direct labor cost.

Direct Materials................................................................$11

Direct Labor.....................................................................$15

Overhead (fixed & variable) (200% of direct labor)...................$30

Total............................................................................. $56

The required volume of output to produce the motors will not require any incremental fixed overhead. Incremental variable overhead cost will be $17 per unit. Should the company make or buy this part?

Reference no: EM13486182

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