Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Information for questions 20-23 Lewis Auto Company manufactures a part for use in its production of automobiles. When 10,000 items are produced, the costs per

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

Information for questions 20-23 Lewis Auto Company manufactures a part for use in its production of automobiles. When 10,000 items are produced, the costs per unit are: Direct materials $ 12 Direct manufacturing labor 60 Variable manufacturing overhead 24 Fixed manufacturing overhead 32 Total $128 Monty Company has offered to sell Lewis Auto Company 10,000 units of the part for $120 per unit. The plant facilities could be used to manufacture another part at a savings of $180,000 if Lewis Auto accepts the supplier's offer. In addition, $20 per unit of fixed manufacturing overhead on the original part would be eliminated. What is the relevant manufacturing cost per unit for this decision? What is the opportunity Cost related to Lewis choosing to continue making the part? If Lewis Auto follows your advice from question 22, how much money will the company save? Should Lewis Auto make or buy the part? Information for questions 20-23 Lewis Auto Company manufactures a part for use in its production of automobiles. When 10,000 items are produced, the costs per unit are: Direct materials $ 12 Direct manufacturing labor 60 Variable manufacturing overhead 24 Fixed manufacturing overhead 32 Total $128 Monty Company has offered to sell Lewis Auto Company 10,000 units of the part for $120 per unit. The plant facilities could be used to manufacture another part at a savings of $180,000 if Lewis Auto accepts the supplier's offer. In addition, $20 per unit of fixed manufacturing overhead on the original part would be eliminated. What is the relevant manufacturing cost per unit for this decision? What is the opportunity Cost related to Lewis choosing to continue making the part? If Lewis Auto follows your advice from question 22, how much money will the company save? Should Lewis Auto make or buy the part

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Income Tax Fundamentals 2013

Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill

31st Edition

1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516

Students also viewed these Accounting questions

Question

state the objectives and scope for each of the 45 IFRS standards

Answered: 1 week ago