Dentech, Inc , uses 13 units of part RM67 each month in the production of dentistry equipment The cost of manufacturing one unit of RM67 is the following Direct material $ 3,000 Material handling (20 of direct material cost) 600 Direct labor 34,000 Manufacturing overhead (150 of direct labor) 51,000 Total manufacturing cost $ 88,600 Material handling represents the direct variable costs of the Receiving Department that are applied to direct materials and purchased components on the basis of their cost This is a separate charge in addition to manufacturing overhead Dentechs annual manufacturing overhead budget is one third variable and two thirds fixed Scott Supply, one of Dentechs reliable vendors, has offered to supply part number RM67 at a unit price of $55,000 Required 1 If Dentech purchases the RM67 units from Scott, the capacity Dentech used to manufacture these parts would be idle Should Dentech decide to purchase the parts from Scott, the unit cost of RM67 would increase (or decrease) by what amount

Question

Dentech, Inc , uses 13 units of part RM67 each month in the production of dentistry equipment  The cost of manufacturing one unit of RM67 is the following  Direct material $ 3,000 Material handling (20  of direct material cost) 600 Direct labor 34,000 Manufacturing overhead (150  of direct labor) 51,000 Total manufacturing cost $ 88,600 Material handling represents the direct variable costs of the Receiving Department that are applied to direct materials and purchased components on the basis of their cost  This is a separate charge in addition to manufacturing overhead  Dentechs annual manufacturing overhead budget is one third variable and two thirds fixed  Scott Supply, one of Dentechs reliable vendors, has offered to supply part number RM67 at a unit price of $55,000  Required  1  If Dentech purchases the RM67 units from Scott, the capacity Dentech used to manufacture these parts would be idle  Should Dentech decide to purchase the parts from Scott, the unit cost of RM67 would increase (or decrease) by what amount

Accepted Answer

The Answer is in the image, click to view ...

Question

Dentech, Inc., uses 13 units of part RM67 each month in the production of dentistry equipment. The cost of manufacturing one unit of RM67 is

Step by Step Solution

Step: 1

Get Instant Access to Expert-Tailored Solutions

Step: 2

Step: 3

Ace Your Homework with AI

Recommended Textbook for

Marketing Audit Guide What It Is Why Your Business Needs One And How To Do It

Students also viewed these Accounting questions

Question

Question

Question

Question

Question

Question

Question

Question

Question

Question

Question

Question

Question

Question


Direct material	$	3,000
Material handling (20% of direct-material cost)		600
Direct labor		34,000
Manufacturing overhead (150% of direct labor)		51,000

Total manufacturing cost	$	88,600

Required:
1.	If Dentech purchases the RM67 units from Scott, the capacity Dentech used to manufacture these parts would be idle. Should Dentech decide to purchase the parts from Scott, the unit cost of RM67 would increase (or decrease) by what amount?