Corridor Co. can produce 130 units of a necessary component part with the following costs: Direct...
Corridor Co. can produce 130 units of a necessary component part with the following costs:
|
Direct materials |
$23536 |
|
Fixed selling and admin |
17585 |
|
Direct labour |
18322 |
|
Variable manufacturing overhead |
37651 |
|
Fixed manufacturing overhead |
10312 |
If Corridor purchases the component externally, $3879 of the fixed
costs can be avoided. In addition, the warehouse could be rented
out for $5768 per year. Below what external price for the 130 units
would Corridor choose to buy instead of make?
Select one:
a. $77620
b. $106741
c. $89156
d. $83388
Homework Answers
Correct answer-------(a) $77620
| Relevamnt cost calculation | |
| Direct material | $ 23,536.00 |
| Direct labor | $ 18,322.00 |
| Variable overheads | $ 37,651.00 |
| Avoidable fixed expenses | $ 3,879.00 |
| Total Avoidable cost | $ 83,388.00 |
| Less: Benefit to be achived from buying instead of making | $ (5,768.00) |
| Net Relevant cost of Making 130 units | $ 77,620.00 |
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Corridor Co. can produce 130 units of a necessary component part
with the following costs:
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