Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
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The green tree company manufacturers wooden
Transcribed Image Text:The Green Tree Company manufactures wooden toys and is considering
outsourcing a wooden component. The current manufacturing costs are:
⚫ Direct materials: $15 per unit
⚫ Direct labor: $12 per unit
⚫ Variable overhead: $18 per unit Additionally, a quality control
supervisor, who earns $60,000 annually, is required for this
production.
If Green Tree needs 120,000 components annually, the maximum purchase
price per unit they should consider paying is:
a. $45.00
b. $45.50
c. $27.00
d. $33.00
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