the bedford company produces component a 4 that is used by the company
The Bedford Company produces Component A-4 that is used by the company in its production of Product ST. The costs of producing Component A-4 consist of $16 for materials, $14 for labor, $6 of variable overhead, and $8 of fixed overhead. The company is considering buying the component for $40 per unit and using the facilities to produce an equal number of units of Product R that the company estimates will bring in a contribution margin of $6 per unit produced.
Determine whether Component A-4 should be made or bought. Show your computations.
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