Ahrends Corporation makes 56,000 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 $19.30 Direct labor Variable manufacturing overhead 25.90 6.00 Fixed manufacturing overhead 34.30 Unit product cost $ 85.50 An outside supplier has offered to sell the company all of these parts it needs for $71.80 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 $392,000 per year. If the part were purchased from the outside supplier, at of the direct labor cost of the pert would be avoided. However, $29.90 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 56,000 units required each year? (Round your intermediate calculations to 2 decimal places) Mutiple Choice $9250 per unit $85 50 per u $62.60 per unt
Ahrends Corporation makes 56,000 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 $19.30 Direct labor Variable manufacturing overhead 25.90 6.00 Fixed manufacturing overhead 34.30 Unit product cost $ 85.50 An outside supplier has offered to sell the company all of these parts it needs for $71.80 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 $392,000 per year. If the part were purchased from the outside supplier, at of the direct labor cost of the pert would be avoided. However, $29.90 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 56,000 units required each year? (Round your intermediate calculations to 2 decimal places) Mutiple Choice $9250 per unit $85 50 per u $62.60 per unt
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
am. 100.
Transcribed Image Text:Ahrends Corporation makes 56,000 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
$19.30
25.90
6.08
Variable manufacturing overhead
Fixed manufacturing overhead
34.30
Unit product cost
$ 85.50
An outside supplier has offered to sell the company all of these parts it needs for $71.80 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
$392,000 per year.
If the part were purchased from the outside supplies, all of the direct labor cost of the part would be avoided. However, $29.90 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 55,000 units
required each year? (Round your intermediate calculations to 2 decimal places.)
Mutiple Choice
O
$9250 per unit
$85.50 per unit
$62.60 per un
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