Buy or make decisions

kelove1

When the question is for consideration to buy in a product and it states 'this would save on variable costs of production and direct fixed costs of production' how do I calculate the variable cost for the revised operating statement?

PeterC

Variable costs in the Operating Statement would be the original figure less the saving (ie. plus the purchase price, less the variable production cost).

You haven't asked, but fixed costs would also change.