The Sarasota Company manufactures 5,200 units of a part that could be purchased from an outside supplier for $14 each. Sarasota'scosts to manufacture each part are as follows:Direct materials$3Direct labor2Variable manufacturing overhead5Fixed manufacturing overhead9Total$19All fixed overhead is unavoidable and is allocated based on direct labor. The facilities that are used to manufacture the part have noalternative uses. (c) If Sarasota could lease the manufacturing facilities to another company for $25,200 per year, what would be the net total costto outsource production of the part?Net cost to buy $

Solution : Purchase cost = units * supplier price = 5200*$14 = $72,800

Answered: a Company manufactures 5,200 units of a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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a Company manufactures 5,200 units of a part that could be purchased from an outside supplier for $14 each. Sar. nufacture each part are as follows: erials $3 er 2 anufacturing overhead ufacturing overhead 9 $19