post technologies company has been purchasing carrying cases for its portable tablets at a delivered cost of $13.00 per unit. the company, which is currently operating below full capacity, charges factory overhead to production at the rate of 60% of direct labor cost. the total unit costs to produce comparable carrying cases are expected to be as follows: direct materials $4.00 If Watts Technologies Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 20% of the direct labor costs.
