Question
The Bogart Company produces 6,000 units of item SLM 46 annually at a total cost of $240,000. Direct materials $ 24,000 Direct labor 66,000 Variable
The Bogart Company produces 6,000 units of item SLM 46 annually at a total cost of $240,000.
| Direct materials | $ | 24,000 | |
| Direct labor | 66,000 | ||
| Variable overhead | 54,000 | ||
| Fixed overhead | 96,000 | ||
| Total | $ | 240,000 | |
The Conner Company has offered to supply all 6,000 units of SLM 46 per year for $35 per unit. If Bogart accepts the offer, $8 per unit of the fixed overhead would be saved. In addition, some of Bogart's leased facilities could be vacated, reducing lease payments by $96,000 per year. At what price would Bogart be indifferent to Conner's offer?
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Intermediate Accounting
Authors: Steven M. Bragg
1st Edition
1642210803, 9781642210804
