Transcribed Image Text: The estimated costs of producing 6,000 units of a component are: Per Unit Direct Material Direct Labor $10 8. Applied Variable Factory Overhead 9. Applied Fixed Factory

Transcribed Image Text: The estimated costs of producing 6,000 units of a component are:
Per Unit
Direct Material
Direct Labor
$10
8.
Applied Variable Factory Overhead
9.
Applied Fixed Factory Overhead
$1.5 per direct labor dollar
The same component can be purchased from market at a price of $29 per unit. If the component is
12
purchased from market, 25% of the fixed factory overhead will be saved.
Required:
a. Should the component be purchased from the market?
b. Being a production manager, provide your logical opinion on choosing between
purchasing the component from market or producing in-house