Business, 15.02.2022 15:50 shatj960

Zion Manufacturing had always made its components in-house. However, Bryce Component Works had recently offered to supply one component, K2, at a price of $12 each. Zion uses 4,900 units of Component K2 each year. The cost per unit of this component is as follows: Direct materials $7.54
Direct labor 2.64
Variable overhead 1.11
Fixed overhead 3.00
Total $14.29

The fixed overhead is an allocated expense; none of it would be eliminated if production of Component K2 stopped.

Required:
a. What are the alternatives facing Zion Manufacturing with respect to production of Component K2?
b. List the relevant costs for each alternative.
b.

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