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Exercise 7-8. The Elkhardt Corporation produces an executive jet for which it currently manufactures a fuel valve; the cost of the valve is indicated below.
Exercise 7-8. The Elkhardt Corporation produces an executive jet for which it currently manufactures a fuel valve; the cost of the valve is indicated below. Cost per Unit Variable costs Direct material $954 Direct labor 678 Variable overhead 274 Total variable $1,906 costs Fixed costs Depreciation of 509 equipment Depreciation of 195 building Supervisory 274 salaries Total fixed costs 978 Total cost $2,884 The company has an offer from Duvall Valves to produce the part for $2,034 per unit and supply 970 valves (the number needed in the coming year). If the company accepts this offer and shuts down production of valves, production workers and supervisors will be reassigned to other areas where, unfortunately, they really are not needed. The equipment cannot be used elsewhere in the company, and it has no market value. However, the space occupied by the production of the valve can be used by another production group that is currently leasing space for $54,560 per year. Calculate the total incremental cost of buying the valuves. Enter your answers as amounts only with neither commas nor decimals
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