Every year Cheyenne Industries manufactures 8,000 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total Pharoah, Inc., has offered to sell 8,000 units of part 231 to Cheyenne for $32 per unit. If Cheyenne accepts Pharoah's offer, its freed-up facilities could be used to earn $13,700 in contribution margin by manufacturing part 240. In addition, Cheyenne would eliminate 40% of the fixed overhead applied to part 231. (a) $3.00 9.00 7.00 10.00 $29.00 Your answer is partially correct. Calculate total relevant cost to make and net cost to buy. Total relevant cost to make $ Net relevant cost to buy $ 120000 242300 I SUPE

Every year Cheyenne Industries manufactures 8,000 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total Pharoah, Inc., has offered to sell 8,000 units of part 231 to Cheyenne for $32 per unit. If Cheyenne accepts Pharoah's offer, its freed-up facilities could be used to earn $13,700 in contribution margin by manufacturing part 240. In addition, Cheyenne would eliminate 40% of the fixed overhead applied to part 231. (a) $3.00 9.00 7.00 10.00 $29.00 Your answer is partially correct. Calculate total relevant cost to make and net cost to buy. Total relevant cost to make $ Net relevant cost to buy $ 120000 242300 I SUPE

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 6PA: Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A...

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Remarkable Enterprises requires four units of part A for every unit of Al that it produces. Currently, part A is made by Remarkable, with these per-unit costs in a month when 4,000 units were produced: Variable manufacturing overhead is applied at $1.60 per unit. The other $0.50 of overhead consists of allocated fixed costs. Remarkable will need 8,000 units of part A for the next years production. Altoona Corporation has offered to supply 8,000 units of part A at a price of $8.00 per unit. If Remarkable accepts the offer, all of the variable costs and $2,000 of the fixed costs will be avoided. Should Remarkable accept the offer from Altoona Corporation?
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