Question
Cruise Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this? part, assuming a
Cruise Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this? part, assuming a production level of? 6,300 units, are as? follows:
Direct materials | ?$4.10 |
Direct labor | ?$4.40 |
Variable manufacturing overhead | ?$3.30 |
Fixed manufacturing overhead | ?$1.20 |
Total cost | ?$13.00 |
The fixed overhead costs are unavoidable. |
Assume Cruise Company can purchase? 6,300 units of the part from Suri Company for? $14.30 each, and the facilities currently used to make the part could be used to manufacture? 6,300 units of another product that would have an? $9 per unit contribution margin. If no additional fixed costs would be?incurred, what should Cruise Company? do?
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