Question
The Whispering Winds Company manufactures 5,500 units of a part that could be purchased from an outside supplier for $ 16 each. Whispering Windss costs
The Whispering Winds Company manufactures 5,500 units of a part that could be purchased from an outside supplier for $ 16 each. Whispering Windss costs to manufacture each part are as follows:
Direct materials | $ 4 | ||
Direct labor | 3 | ||
Variable manufacturing overhead | 6 | ||
Fixed manufacturing overhead | 10 | ||
Total | $ 23 |
All fixed overhead is unavoidable and is allocated based on direct labor. The facilities that are used to manufacture the part have no alternative uses.
a) Calculate relevant cost to make.
Relevent cost to make | $ enter relevent cost to make in dollars per unit per unit |
(b) Should Whispering Winds continue to manufacture the part?
select an option NoYes |
(c) If Whispering Winds could lease the manufacturing facilities to another company for $ 25,500 per year, what would be the net total cost to outsource production of the part?
Net cost to buy | $ enter the net cost to buy in dollars |
(d) Should Whispering Winds outsource production of the part given the opportunity to lease the facilities?
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