Charge Company manufactures a part for its production cycle. The annual costs per unit for 5,000 units of the part are given below. The fixed factory overhead costs are unavoidable. Another company has offered to sell 5,000 units of the same part to Charge Company for $15 per unit. The facilities currently used to make the part could be rented out to another manufacturer for $20,000 a year. Charge Company should Per Unit $3.00 Direct materials Direct labor 5.00 Variable factory overhead Fixed factory overhead Total costs 4.00 2.00 $14.00 buy the part and rent facilities to save $5,000 O make the part to save $15,000 buy the part and rent facilities to save $15,000 make the part to save $5,000 O make the part to save $10,000 O

Charge Company manufactures a part for its production cycle. The annual costs per unit for 5,000 units of the part are given below. The fixed factory overhead costs are unavoidable. Another company has offered to sell 5,000 units of the same part to Charge Company for $15 per unit. The facilities currently used to make the part could be rented out to another manufacturer for $20,000 a year. Charge Company should Per Unit $3.00 Direct materials Direct labor 5.00 Variable factory overhead Fixed factory overhead Total costs 4.00 2.00 $14.00 buy the part and rent facilities to save $5,000 O make the part to save $15,000 buy the part and rent facilities to save $15,000 make the part to save $5,000 O make the part to save $10,000 O

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 7EB: Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has...

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