Question

.l Sprint LTE ** 8:31 PM 27% 337 33 Golden Company manufactures a part for its production cycle. The annual costs per unit for 10,000 units of the part are as follows: Per Unit Direct materials $20.00 Direct labor 15.00 Variable factory overhead 6.00 Fixed factory overhead 10.00 Total costs $51.00 The fixed factory overhead costs are unavoidable. Olson Company has offered to sell 10,000 units of the same part to Golden Company for $55 per unit. The facilities currently used to make the part could be used to make 10,000 units per year of a new product that has a contribution margin of $20 per unit. No additional fixed costs would be incurred with the new product Golden Company should More options

Answer 1

Paga No Data * Calculation Fixed factory irrelevant in on Cost aree unavoidable so it is this decision. Relevant cost to make pes voit = 20+ 15 +6 = $ 41 Cost to make Product inhows - (oooo unity X = $410000 941per unit. > Buy Cost to buy = - = 10000 unith $ 550000__ 955 per unit If we buy from outside another product Can be manufacture so income from that Product Wivne = 10000 Un7 9 20 = 200000 So if company buy expense to the Company will be $ 5 000 - 200000 = $ 3500000 = Cost of makina Cost of buying 410000 350000 $ 60000 = - Dillerense should buy as it will The Company <a Se 9 Goooo .