Sled Manufacturing budgeted 10,000 widgets for production during 201

Sled Manufacturing budgeted 10,000 widgets for production during 2012. Sled has capacity to produce 12,000 units. Fixed factory overhead is allocated to production. The following estimated costs were provided: Direct material ($14/unit)$ 140,000 Direct labor ($30/hr. Solution Hi, Part 1 Sales Value (1000*86) = 86000 Variable Cost Direct Material (1000*14) = 14000 Direct Labor (1000*2*30) = 60000 Variable Manu. Overhead (1000*6) = 6000 Contribution = = 6000 (Order should be accepted as it generates an additional margin of $ 6000. Part 2 If produced self = total variable cost = 14 + 60 +6 = 80 If obtained from outside = 78 Fixed cost will have to be incurred in both the cases. Since the cost of procurement from outside is lesser than in-house variable cost, sled should give the order to outside supplier. Thanks, Aman