Question

You make widgets that attach to your main product which is a whatchamacallit. You have identified...

You make widgets that attach to your main product which is a whatchamacallit. You have identified another company from whom you could buy widgets and then you would not have to make them for yourself. Below are your cost for making widgets, calculate which cost as Avoidable and which are Unavoidable and the Avoidable and unavoidable Cost Per Widget.

Total in House Avoidable Unavoidable
Loan on Widget Making Machine $50,000
Wages of Widget Makers $150,000
Raw Materials for Widgets $37,000
Lease Payment on Widget Shop $5,000
Maintenance on Widget Equipment $3,750
Totals $245,750
Cost per Widget (Total/50,000) $4.92

What is the AVOIDABLE Cost per Widget?

Assuming you could buy widgets for $3.00 per unit, calculate the Total Cost per Widget.

Unavoidable Cost Per Widget
Purchase Cost per Widget
Total Cost to Buy per Widget

What is the Total Cost to Per Widget if Bought?

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