Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Help Save Ahrends Corporation makes 70,000 units per year of a part it uses in the products it manufactures. The unit product cost of this

image text in transcribed
Help Save Ahrends Corporation makes 70,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $17.80 19.00 1.00 17.10 $54.90 An outside supplier has offered to sell the company all of these parts it needs for $48.50 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 $273000 per year. If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However. $8.20 of the fxed 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 relevant in the decision of whether to make or buy the part? (Round your intermediate How much of the unit product cost of $5490 is calculations to 2 decimal places.) Prev 40, 15, fil Next>

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

Recommended Textbook for

Cost Accounting

Authors: M.Y. Khan, P.K. Jain

2nd Edition

9339203445, 9789339203443

More Books

Students also viewed these Accounting questions