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1 The Pixels Corporation produces a component used in manufacture of one of its most selled products. The costs associated with production of 10,000 units
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The Pixels Corporation produces a component used in manufacture of one of its most selled products. The costs associated with production of 10,000 units of this component is presented in the table above. The PCAOB Corp. offered to sell Pixels 10,000 units of the same piece to a price of $ 36 per unit. Assume that Pixels have no alternate use for factory facilities that would be released. Based on all the information above, Pixels must manufacture your own piece or outsource with PCAOB? Note that if you accept outsource would save $ 60,000 of fixed costs indirect. Or a. Manufacture the part because you save $ 6 per unit Or b. Buy the piece of PCAOB because it saves $ 60,000 Or c. Manufacture the part because save $ 2 per unit Od. Buy the piece of DCARL Direct materials Direct workmanship Variable indirect costs Fixed indirect costs Total Costs $ 90,000 130,000 60,000 140,000 $ 420,000 Of the overhead fixed costs, $ 60,000 could be avoided. Or a. Manufacture the part because you save $ 6 per unit Ob. Buy the piece of PCAOB because it saves $ 60,000 OR C. Manufacture the part because save $ 2 per unit Or d. Buy the piece of PCAOB because it saves $ 6 per unit Step by Step Solution
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