Ahrends Corporation makes 56,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials $19.30 Direct labor Variable manufacturing overhead 25.90 6.00 Fixed manufacturing overhead 34.30 Unit product cost $ 85.50 An outside supplier has offered to sell the company all of these parts it needs for $71.80 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $392,000 per year. If the part were purchased from the outside supplier, at of the direct labor cost of the pert would be avoided. However, $29.90 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products. What is the maximum amount the company should be willing to pay an outside supplier per unit for the part if the supplier commits to supplying all 56,000 units required each year? (Round your intermediate calculations to 2 decimal places) Mutiple Choice $9250 per unit $85 50 per u $62.60 per unt
Ahrends Corporation makes 56,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials $19.30 Direct labor Variable manufacturing overhead 25.90 6.00 Fixed manufacturing overhead 34.30 Unit product cost $ 85.50 An outside supplier has offered to sell the company all of these parts it needs for $71.80 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $392,000 per year. If the part were purchased from the outside supplier, at of the direct labor cost of the pert would be avoided. However, $29.90 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products. What is the maximum amount the company should be willing to pay an outside supplier per unit for the part if the supplier commits to supplying all 56,000 units required each year? (Round your intermediate calculations to 2 decimal places) Mutiple Choice $9250 per unit $85 50 per u $62.60 per unt
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
am. 100.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education