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Ahrends Corporation makes 48,000 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. Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 15.30 24.30 3.60 29.50 $ 72.70 An outside supplier has offered to sell the company all of these parts it needs for $59.00 a unit. If the company accepts this offer, the facilities now being used to 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 $360,000 per y If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $25.90 of the fixed manufacturing overhe- the applic

Ahrends Corporation makes 48,000 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. Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 15.30 24.30 3.60 29.50 $ 72.70 An outside supplier has offered to sell the company all of these parts it needs for $59.00 a unit. If the company accepts this offer, the facilities now being used to 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 $360,000 per y If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $25.90 of the fixed manufacturing overhe- the applic

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Ahrends Corporation makes 48,000 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 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost An outside supplier has offered to sell the company all of these parts it needs for $59.00 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 $360,000 per year. If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $25.90 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 48,000 units required each year? (Round your intermediate calculations to 2 decimal places.) Multiple Choice $7.50 per unit $54.30 per unit $ 15.30 24.30 3.60 29.50 $ 72.70 $80.20 per unit $72.70 per unit Prey 1 of 20 www Next
Transcribed Image Text:Ahrends Corporation makes 48,000 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 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost An outside supplier has offered to sell the company all of these parts it needs for $59.00 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 $360,000 per year. If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $25.90 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 48,000 units required each year? (Round your intermediate calculations to 2 decimal places.) Multiple Choice $7.50 per unit $54.30 per unit $ 15.30 24.30 3.60 29.50 $ 72.70 $80.20 per unit $72.70 per unit Prey 1 of 20 www Next
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