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19. Cardinal Company needs 20,000 units of a certain part to use in one of its products. The following information is available: Cost to Cardinal
19. Cardinal Company needs 20,000 units of a certain part to use in one of its products. The following information is available: Cost to Cardinal to make the part: Direct Materials Direct Labour Varinblu Manufacturing Overhead Fixed Manufacturing verlicud IN Cost la buy the part from the Oriolu Company: Orole Company has offered to sell this part to Cardinal Company for $36 each. If' Cardinal wers lo buy the part from Oriole instead of making it. Cardinal would not have any use for the released capacity. In addition, 60% of the fixed manufacturing overhead costs would continue regardless of what decision is made. Assume that direct labour & an avoidable cost in this decision. In deciding whether to make or buy the part, what would be the total relevant costs lo make the part? a) S560,000. b) $640,000 c) S720,000. d) $760.000. 20. Manice Company produces three products. X. Y. & Zwith the following characteristics. 116 1002 Mi 100 bet per 90 Capsiben taringer $ 80 Wachhours per un 5 has only 2.000 machme hours available cach month. Il demandexeeds the company capacly, in what sequence should orders be lilled if the company wants la mamze total contribution margin: an Order to Z lisecond, am Yahud. b Order for linz, Zecond, and Yurd. c) Order lur Yliel. X cond, and third d) Orders for 7 lird und no order for OEY
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