Ace Company manufactures 15,000 units of Beeman each year for use on its production line. At this level of activity, the cost per unit for Beeman is:

Direct Materials $ 4.80 Direct Labor 7.00 Variable manufacturing overhead 3.20 Fixed manufacturing overhead 10.00 Total cost per part $25.00

An outside supplier has offered to sell 15,000 units of Beeman each year to Ace Company for 23.50 per part. Ace Company has determined that $4 of the fixed manufacturing overhead being applied to Beeman would continue if Beeman were purchased from the outside supplier.

Question 6 (3 points)

For this decision, what is the cost per unit for Ace to manufacture Beeman?

Question 6 options:

Question 7 (3 points)

Should Ace accept the offer to purchase part Beeman from the outside supplier?

Question 7 options:

	Yes
	No