Harris Company currently produces a component that it uses in making some of its products. Harris has calculated the following costs for making the part: $$\begin{array} { | l | r | }
\hline \text { Unit-level costs } & \
\hline \text { Materials } & \$ 20 \
\hline \text { Labor } & 28 \
\hline \text { Overhead } & 2 \
\hline \text { Allocated facility-level costs } & 10 \
\hline \text { Total cost } & \$ 60 \
\hline
\end{array}$$
Harris is considering outsourcing the component. A supplier has offered to sell the component to Harris for $52 each. Harris needs 8,000 units each year.
Required:
Should Harris outsource the component? Support your answer with appropriate computations.

Question

Harris Company currently produces a component that it uses in making some of its products. Harris has calculated the following costs for making the part: $$\begin{array} { | l | r | } 
\hline \text { Unit-level costs } & \
\hline \text { Materials } & \$ 20 \
\hline \text { Labor } & 28 \
\hline \text { Overhead } & 2 \
\hline \text { Allocated facility-level costs } & 10 \
\hline \text { Total cost } & \$ 60 \
\hline
\end{array}$$ 
Harris is considering outsourcing the component. A supplier has offered to sell the component to Harris for $52 each. Harris needs 8,000 units each year.
Required:
Should Harris outsource the component? Support your answer with appropriate computations.

Quizplus · Accepted Answer

The Answer of Harris Company currently produces a component that it uses in making some of its products. Harris has calculated the following costs for making the part: $$\begin{array} { | l | r | } 
\hline \text { Unit-level costs } & \
\hline \text { Materials } & \$ 20 \
\hline \text { Labor } & 28 \
\hline \text { Overhead } & 2 \
\hline \text { Allocated facility-level costs } & 10 \
\hline \text { Total cost } & \$ 60 \
\hline
\end{array}$$ 
Harris is considering outsourcing the component. A supplier has offered to sell the component to Harris for $52 each. Harris needs 8,000 units each year.
Required:
Should Harris outsource the component? Support your answer with appropriate computations.

Harris Company Currently Produces a Component That It Uses in Making