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The Sacramento Company manufactures Part No. 498 for use in its production line. The manufacturing cost per unit for 30000 units of Part No. 498
The Sacramento Company manufactures Part No. 498 for use in its production line. The manufacturing cost per unit for 30000 units of Part No. 498 is as follows:
Data table $ 66 Direct materials 4 Variable direct manufacturing labor 25 Variable manufacturing overhead 17 20 Fixed manufacturing overhead allocated $ Total manufacturing cost per unit The Cushion Company has offered to sell 30,000 units of Part No. 498 to Sacramento for $61 per unit. Sacramento will make the decision to buy the part from Cushion if there is an overall savings of at least $15,000 for Sacramento. If Sacramento accepts Cushion's offer, $5 per unit of the fixed overhead allocated would be eliminated. Furthermore, Sacramento has determined that the released facilities could be used to save relevant costs in the manufacture of Part No. 575. Print Done Requirement For Sacramento to achieve an overall savings of $15,000, the amount of relevant costs that would have to be saved by using the released facilities in the manufacture of Part No. 575 would be which of the following: (a) $150,000, (b) $315,000, (c) $15,000 or (d) $450,000? Show your calculations. What other factors might Sacramento consider before outsourcing to Cushion? Print Done Begin by selecting the labels to calculate the relevant costs that would have to be saved and then enter in the supporting calculations. Cost to purchase Total relevant costs of making: (per unit) Variable manufacturing costs $ 46 Fixed costs eliminated Costs saved by not making 30,000 * units in the offer Total costs saved Extra costs of purchasing outside Minimum savings required Necessary relevant costs to be savedStep by Step Solution
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