Xyz company needs 1000 motors in its manufacture of

Reference no: EM13573527

XYZ Company needs 1,000 motors in its manufacture of automobiles. It can buy the motors from ABC for $1,250 each. XYZ's plant can manufacture the motors for the following costs per unit:

Direct materials $ 650
Direct manufacturing labor 250
Variable manufacturing overhead 200
Fixed manufacturing overhead 350
Total $1,450

If XYZ buys the motors from ABC, 75% of the fixed manufacturing overhead applied will not be avoided.

Required:Should the company make or buy the motors? Show calculations.

Reference no: EM13573527

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