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JLM Company makes 12,000 units per year of a part it uses in the products it manufactures. The per unit product cost of this part
JLM Company makes 12,000 units per year of a part it uses in the products it manufactures. The per unit product cost of this part is shown below: direct materials .............. $15.00 direct labor .................. 16.00 variable overhead ............. 11.00 fixed overhead ................ ????? total ......................... $????? An outside supplier has offered to sell JLM Company 12,000 units of this part a year for $55.00 per unit. If JLM Company accepts this offer, the facilities now being used to make this part could be used to make more units of a product that is in high demand. The additional contribution margin that could be earned on this other product would be $34,800 per year. 60% of the fixed overhead would be eliminated if JLM purchases the part from the outside supplier. The other 40% of the fixed overhead is allocated and would be still be incurred even if the part is purchased from the outside supplier. It has been determined that if JLM Company purchases the part from the outside supplier their net income would increase by $30,000. Calculate the fixed overhead cost per unit related to this part.
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