Fixed costs : Administration $ 63,450 $ 65,500 Rent $ 65,317 $ 63,904 6 . Question : ( TCO H ) Lindon Company uses 7,500 units of Part Y each year as a component in the assembly of one of its products . The company is presently producing Part Y internally at a total cost of $ 119,000 as follows . Direct materials $ 26,000 Direct labor 28,000 Variable manufacturing overhead 20,000 Fixed manufacturing overhead 45,000 Total costs $ 119,000 An outside supplier has offered to provide Part Y at a price of $ 12 per unit . If Lindon stops producing the part internally , one third of the fixed manufacturing overhead would be eliminated . Required : Prepare a make-or-buy analysis showing the annual advantage or disadvantage of accepting the outside supplier ' s offer . Please state clearly whether the part should be made or bought and share your work .
7 . Question : ( TCO B ) Sandler Corporation bases its predetermined overhead rate on the estimated machine hours for the upcoming year . Data for the upcoming year appear below .