The Bridgeport Company manufactures 5,900 units of a part that could
be purchased from an outside supplier for $16 each. Bridgeport’s costs to manufacture each part are as follows:
Direct materials$4
Direct labor 3
Variable manufacturing overhead 6
Fixed manufacturing overhead 10
Total $23
All fixed overhead is unavoidable and is allocated based on direct labor. The facilities that are used to manufacture the part have no alternative uses.
(a-b)
(a) Calculate relevant cost to make.
Relevent cost to make $ per unit
(b) Should Bridgeport continue to manufacture the part?
Yes
No
Sample Solution
