Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Google Corporation makes 42,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is

image text in transcribed Google Corporation makes 42,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: An outside supplier has offered to sell the company all of these parts it needs for $83.00 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $231,000 per year. If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $33.40 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products. What is the maximum amount the company should be willing to pay an outside supplier per unit for the part if the supplier commits to supplying all 42,000 units required each year? (Round your intermediate calculations to 2 decimal places.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

CL I P COL Astro- L(1-cas0) Lsing *A=2 L sin(0/2)

Answered: 1 week ago

Question

Design a health and safety policy.

Answered: 1 week ago