Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Liffick Corporation is a specialty component manufacturer with idle capacity. Management would like to use its unused capacity to generate additional profits. A potential customer

Liffick Corporation is a specialty component manufacturer with idle capacity. Management would like to use its unused capacity to generate additional profits. A potential customer has offered to buy 6,800 units of component VFG. Each unit of VFG requires 8.00 units of material C79 and 6.00 units of material X70. Data concerning these two materials follow:

Material Units in Stock Original Cost Per Unit Current Market Price Per Unit Disposal Value Per Unit
C79 33,020 $4.40 $3.95 $3.70
X70 31,660 $9.90 $10.20 $8.95

Material C79 is in use in many of the company's products and is routinely replenished. Material X70 is no longer used by the company in any of its normal products and existing stocks would not be replenished once they are used up.

What would be the relevant cost of the materials, in total, for purposes of determining a minimum acceptable price for the order for product VFG?

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

Tracking Your Trek Looking Backward To Determine Your Forward

Authors: Erica Pauly

1st Edition

979-8839157330

More Books

Students also viewed these Accounting questions

Question

4. How has e-commerce affected business-to-business transactions?

Answered: 1 week ago