Reference no: EM132547393

Growe Company manufactures sewing machines and requires 30,000 units of a component that is used in the manufacturing process. If Growe buys the part from Zigler Brothers the plant will be idle. Of the fixed, 55% overhead will continue regardless of the decision. The cost to buy the part from Zigler is $46.

The unit cost to make the part is:

Direct materials               $12

Direct labour                   20

Variable overhead           12

Average fixed overhead  10

Total                             $54

Question 1: Relevant costs to make the part are:

Group of answer choices

Option 1: $1,620,000

Option 2: $1,320,000

Option 3: $1,380,000

Option 4: $1,455,000