Foto Company makes 40,000 units per year of a part it uses in the products it manufactures. The cost per unit of this part is shown below: direct materials .............. $12.00 direct labor .................. 10.10 variable overhead ............. 5.60 allocated fixed overhead ...... 10.50 total ......................... $38.20 An outside supplier has offered to sell Foto Company 40,000 of these parts for $36.70 per unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin earned on this other product would be $310,000 per year. Calculate the selling price per unit charged by the outside supplier that would make Foto economically indifferent between making and buying the part.
Indifferent point
Manufacturing cost = Purchase cost
27.70*40000+310000 = 40000X
Selling price per unit charged by outside supplier = (1108000+310000)/40000 = 35.45 per unit
Foto Company makes 40,000 units per year of a part it uses in the products it...
Foto Company makes 40,000 units per year of a part it uses in the products it manufactures. The cost per unit of this part is shown below: Direct Materials 12 Direct Labor 10.10 Variable Overhead 5.60 Allocated Fixed Overhead 10.50 Total 38.20 An outside supplier has offered to sell Foto Company 40,000 of these parts for $36.70 per unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more...
Foto Company makes 40,000 units per year of a part it uses in the products it manufactures. The cost per unit of this part is shown below: direct materials .............. $12.00 direct labor .................. 10.10 variable overhead ............. 5.60 allocated fixed overhead ...... 10.50 total ......................... $38.20 An outside supplier has offered to sell Foto Company 40,000 of these parts for $36.70 per unit. If the company accepts this offer, the facilities now being used to make the part could...
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Foto Company makes 30,000 units per year of a part it uses in the products it manufactures. The cost per unit of this part is shown below: direct materials .............. $11.45 direct labor .................. 9.35 variable overhead ............. 7.75 allocated fixed overhead ...... 4.95 total ........................... $33.50 An outside supplier has offered to sell Foto Company 30,000 of these parts for $32.25 per unit. If the company accepts this offer, the facilities now being...
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