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Armidale Company ( A C ) deals in the manufacture of Part ZM that forms part of CNT Hardware, the company's final / complete product.

Armidale Company (AC) deals in the manufacture of Part ZM that forms part of CNT Hardware,
the company's final/complete product. For 2023, the company's business books contain the
following pieces of information on the manufacturing cost (per unit) of Part ZM:
The Sale and Purchase Manager at the Tamworth Company (TC), another manufacturing
business that produces Part ZM, approached AC and offered a deal, under which TC will sell to
AC 6,501 parts ZM for $134 per part. If AC management agrees to accept this offer, the deal
would save AC $251,000 from its currently committed fixed overhead costs.
Required:
Work out, showing all your calculations, the total amount of costs that are 'relevant' to
the decision AC management is considering as to whether it should accept TC's offer
alternative A or reject it and continue making part ZM in-house (alternative B)?
You are currently working as a junior management accountant at AC. The manager
responsible for making the final decision whether to accept or reject TC's offer
approaches you and asks for your support to help him make the decision. Showing all
your working/calculations about the difference in the total relevant cost to AC under the
two alternatives, will you advise the manager to accept TC's offer or reject it?
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