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A company manufactures and sells 4 products: Selling price Raw materials per unit Variable manufacturing overhead per unit Direct labor per unit Fixed manufacturing
A company manufactures and sells 4 products: Selling price Raw materials per unit Variable manufacturing overhead per unit Direct labor per unit Fixed manufacturing overhead per unit Variable selling fee per unit A B C D 10 $ 6 $ 15 $ 12 $ 2 22111 3 3131 43232 2111 1 2 5 000 7 000 3 000 2 000 Units sold According to the budget, the fixed selling costs amount to $3,000 and the fixed administration costs amount to $6,000. An outside vendor has offered to sell the following products to the company: Purchase price per unit A B C D 6,50 $ 4,50 $ 10 $ 9$ The supplier explains that the company is not obliged to buy all the products. It is possible that the company buys only one product and continues to manufacture the others. a) Should the company accept the offer of Product C if the sales of the products would not be changed? b) At what purchase price would the company agree to buy product C instead of manufacturing it?
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