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Space W Inc. manufacturers specialized aerospace parts. A subcontracting opportunity (buying) of providing 2,000 units of...

Space W Inc. manufacturers specialized aerospace parts. A subcontracting opportunity (buying) of providing 2,000 units of Part XCM for $120 000 is being considered. The internal price of Part XCM is as follows;

Cost per unit

Direct materials

$28

Direct labour

18

Variable Overhead

16

Allocated fixed overhead

4
  1. What is the relevant cost (per unit, RND 2 decimal places) to make the part internally?
  2. What is the estimated increase/decrease in short-term operating profit of producing the product internally versus purchasing the product from a supplier? RND to whole dollars
  3. What other strategic considerations should be reviewed for this make/buy decision?
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