Potter Company manufactures a part for its production cycle. The annual costs per unit for 10,000 units for the part are as follows:
Per Unit
Direct materials. $20.00
Direct labor 15.00
Variable factory overhead. 16.00
Fixed factory overhead 10.00
Total costs $61.00
The fixed factory overhead costs are unavoidable. Paulson Company has offered to sell 10,000 units of the same part to Potter Company for $60 per unit. The facilities currently used to make the part could be rented out to another manufacturer for $100,000 per year. Potter company should
A) make the part to save $10,000
B) buy the part and rent the facilities to save $10,000
C) make the part to save $25,000
D) buy the part and rent the facilities to save $25,000
The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.
Potter Company manufactures a part for its production cycle. The annual costs per unit for 10,000...
.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...
Cuestr McMurphy Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows: Direct materials $86,000 Direct labor 129,000 Variable factory overhead 56,000 Fixed factory overhead 139,000 Total costs $410,000 Of the fixed factory overhead costs, $59,000 is avoidable. Conners Company has offered to sell 10,000 units of the same part to McMurphy Corporation for $36 per unit Assuming there is...
Han Products manufactures 25,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is: 4,70 Direct materials Direct labor 8.00 3.40 Variable manufacturing overhead Fixed manufacturing overhead 15.00 $31.10 Total cost per part An outside supplier has offered to sell 25,000 units of part S-6 each year to Han Products for $50.00 per part. If Han Products accepts this offer, the facilities now being used...
Lewis Auto Company manufactures a part for use in its production of automobiles. When 10,000 units are produced, the costs per unit are: Direct materials $15 Direct manufacturing labor 60 Variable manufacturing overhead 26 Fixed manufacturing overhead 32 Total $133 Monty Company has offered to sell to Lewis Auto Company 10,000 units of the part for $122 per unit. The plant facilities could be used to manufacture another item at a savings of $182,000 if Lewis accepts the offer. In...
Cruise Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a production level of 6 200 units are as follows Direct materials 54.30 Direct labor S420 Variable manufacturing overhead 53.10 Fixed manufacturing overhead $1.40 Total cost $13.00 O A. Make the part and save $10 20 per unit O B. Buy from Suri and save $110 per unit OC. Make the part and save $5.00 per...
McMurphy Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 13,000 units of this part are as follows: Direct materials Direct labor Variable factory overhead Fixed factory overhead Total costs $90,000 128,000 60,000 140,000 $418,000 Of the fixed factory overhead costs, $59,000 is avoidable. Conners Company has offered to sell 13,000 units of the same part to McMurphy Corporation for $41 per unit. Assuming there is no...
McMurphy Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 12,000 units of this part are as follows: Direct materials Direct labor Variable factory overhead Fixed factory overhead Total costs $86,000 126,000 58,000 138,000 $408,000 Of the fixed factory overhead costs, $55,000 is avoidable. Conners Company has offered to sell 12,000 units of the same part to McMurphy Corporation for $41 per unit. Assuming there is no...
McMurphy Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 14,000 units of this part are as follows: Direct materials $89,000 Direct labor 129,000 Variable factory overhead 59,000 Fixed factory overhead 138,000 Total costs $415,000 Of the fixed factory overhead costs, $56,000 is avoidable. Conners Company has offered to sell 14,000 units of the same part to McMurphy Corporation for $41 per unit Assuming there is no...
Roth company manufactures a fantasy part for use in its production. when 10,000 units are produced, the costs per fantasy are: direct materials $0.80 direct manufacturing labor $2.80 variable manufacturing overhead $1.20 fixed manufacturing overhead $1.60 total $6.40 Spinella Company has offered to sell to Roth company 10,000 units of the fantasy part for $6.00 per unit. the plant facilities at Roth could be used to manufacture another item at a savings of $9,000 if Roth accepts the offer to...
Royal Company manufactures 10,000 units of Part R-3 each year.
At this level of activity, the cost per unit for Part R-3
follows:
Direct materials
$14.40
Direct labour
21.00
Variable manufacturing overhead
9.60
Fixed manufacturing overhead
25.00
Total cost per part
$70.00
An outside supplier has offered to sell 10,000 units of Part R-3
each year to Royal Company for $54 per part. If Royal Company
accepts this offer, the facilities now being used to manufacture
Part R-3 could be...