Sunland, Inc. currently manufactures a wicket as its main product. The costs per unit are as follows: Direct materials and direct labor $15 Variable overhead 5 Fixed overhead 8 Total $28 Saran Company has contacted Sunland with an offer to sell it 6500 of the wickets for $22 each. If Sunland makes the wickets, variable costs are $20 per unit. Fixed costs are $8 per unit; however, $5 per unit is unavoidable. Should Sunland make or buy the wickets? Make; savings = $6500 Make; savings = $13000 Buy; savings = $6500 Buy; savings = $19500

Principles of Accounting Volume 2
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ISBN:9781947172609
Author:OpenStax
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Chapter10: Short-term Decision Making
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Sunland, Inc. currently manufactures a wicket as its main product. The costs per unit are as follows:

Direct materials and direct labor $15
Variable overhead 5
Fixed overhead 8
Total
$28


Saran Company has contacted Sunland with an offer to sell it 6500 of the wickets for $22 each. If Sunland makes the wickets, variable costs are $20 per unit. Fixed costs are $8 per unit; however, $5 per unit is unavoidable. Should Sunland make or buy the wickets?

Make; savings = $6500
Make; savings = $13000
Buy; savings = $6500
Buy; savings = $19500
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