Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following standard costs pertain to a component part manufactured by Ashby Company: Direct materials ............................. $ 2 Direct labor .......................................... 5 Manufacturing overhead ...........

The following standard costs pertain to a component part manufactured by Ashby Company:

Direct materials ............................. $ 2

Direct labor .......................................... 5

Manufacturing overhead ........... 20

Standard cost per unit ........ $27

The company can purchase the part from an outside supplier for $25 per unit. The manufacturing overhead is 60% fixed and this fixed portion would not be affected by this decision. Assume thatdirect labor is an avoidable cost in this decision. What is the relevant amount of the standard cost per unit to be considered ina decision of whether to make the part internally or buy it from the external supplier?

a. $2

b. $15

c. $19

d. $27

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

Principles Of Fraud Examination

Authors: Joseph T Wells

2nd Edition

0470128836, 9780470128831

More Books

Students also viewed these Accounting questions

Question

6. How can a message directly influence the interpreter?

Answered: 1 week ago