Therefore, there is a net cost of $7,000 for outsourcing the component to S-SCI. Therefore, it is suggested to make the product.
A variable unit price is the number of labor materials and other resources required to produce a product. Variable costs are all costs that vary depending on how much a company produces and sells. In other words, variable costs increase as production increases and variable costs decrease as production decreases.
Calculate the variable cost per unit. Variable cost per unit is the total variable cost divided by the number of units. Variable costs are sometimes called unit costs because they vary with the number of units produced. Direct labor and indirect costs are often called conversion costs and direct materials and direct labor are often called primary costs.
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