Ahron Company makes 8,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is omputed as follows: Direct materials $14.90 Direct labor 17.50 1.90 Variable manufacturing overhead Fixed manufacturing overhead 21.10 Total manufacturing cost $55.40 n outside supplier has offered to sell the company all of the units it needs. If the company accepts this offer, the facilities now being sed to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on is other product would be $161,600 per year. If the part were purchased from the outside supplier, $7.50 of the fixed manufacturing verhead cost being applied to the part would be eliminated. What is the maximum amount the company should be willing to pay an utside supplier per unit for the part if the supplier commits to supplying all 8,000 units required each year?

Ahron Company makes 8,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is omputed as follows: Direct materials $14.90 Direct labor 17.50 1.90 Variable manufacturing overhead Fixed manufacturing overhead 21.10 Total manufacturing cost $55.40 n outside supplier has offered to sell the company all of the units it needs. If the company accepts this offer, the facilities now being sed to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on is other product would be $161,600 per year. If the part were purchased from the outside supplier, $7.50 of the fixed manufacturing verhead cost being applied to the part would be eliminated. What is the maximum amount the company should be willing to pay an utside supplier per unit for the part if the supplier commits to supplying all 8,000 units required each year?

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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