Question - Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 67,000 units of RX5 follows.
Direct materials $ 4.00
Direct labor 8.00
Overhead 9.00
Total costs per unit $ 21.00
Direct materials and direct labor are 100% variable. Overhead is 80% fixed. An outside supplier has offered to supply the 67,000 units of RX5 for $20.00 per unit.
Required: Calculate the total incremental costs of making and buying component RX5.