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Jerry Auto Company manufactures a part for use in its production of automobiles. When 10,000 units are produced, the costs per unit are: Direct materials
Jerry Auto Company manufactures a part for use in its production of automobiles. When 10,000 units are produced, the costs per unit are: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total $17 60 28 32 $137 Monty Company has offered to sell 10.000 units of the part for $129 per unit to Jerry Auto Company. The plant facilities could be used to manufacture another item at a savings of $182,000 if Jerry accepts the offer. Also, S22 per unit of fixed manufacturing overhead on the original part would be eliminated. Required: Which alternative is best for Jerry Auto Company? By how much? Please show your work
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