Company A has to decide whether to manufacture internally or to buy or contract from outsiders. Company A is able to contract with another company to supply them ready make at $5 each. The details of Company A internal production costs are as follows: Direct material/unit $2.00 Direct labor/unit $3.00 Variable production overhead $0.50 • Fixed production overhead $0.50 Total production per unit cost $6.00 The company also need to pay for transport charges of $5,000 for the delivery of 3,000 units of the product Calculate the relevant cost of buying the product O a. $15,000 O b. $35,000 Oc$30,000 Od. $20,000

Company A has to decide whether to manufacture internally or to buy or contract from outsiders. Company A is able to contract with another company to supply them ready make at $5 each. The details of Company A internal production costs are as follows: Direct material/unit $2.00 Direct labor/unit $3.00 Variable production overhead $0.50 • Fixed production overhead $0.50 Total production per unit cost $6.00 The company also need to pay for transport charges of $5,000 for the delivery of 3,000 units of the product Calculate the relevant cost of buying the product O a. $15,000 O b. $35,000 Oc$30,000 Od. $20,000

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Description: Company A has to decide whether to manufacture internally or to buy or contract from outsiders Company A is able to contract with another company to supplythem ready make at $5 each. The details of Company A internal production costs are as follows:

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 3CE: Patz Company produces two types of machine parts: Part A and Part B, with unit contribution margins...

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