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Gent Designs requires three units of part A for every unit of A1 that it produces. Currently, part A is made by Gent, with these
Gent Designs requires three units of part A for every unit of A1 that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 4,100 units were produced: Direct materials $4.00 Direct labor 1.50 Manufacturing overhead 1.20 Total $6.70 Variable manufacturing overhead is applied at $1.00 per unit. The other $0.20 of overhead consists of allocated fixed costs. Gent will need 6,100 units of part A for the next year's production. Cory Corporation has offered to supply 6,100 units of part A at a price of $6.90 per unit. If Gent accepts the offer, all of the variable costs and $820 of the fixed costs will be avoided. A. Calculate the differential cost? Cost to buy $ Cost to make Differential cost B. Should Gent Designs accept the offer from Cory Corporation? Gent Designs should not accept the offer
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