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All-Alone Inc has always manufactured its own parts. The costs per unit for a special part for its main product are as follows: direct materials, $1; direct labor, $10; variable overhead, $5; and fixed overhead, $8. Let-Me-Help Company has contacted All-Alone with an offer to sell them 5,000 of the special parts for $22 each. All-Alone will eliminate $25,000 of fixed overhead if it accepts the proposal. What are the relevant internal costs for All-Alone?

All-Alone Inc has always manufactured its own parts. The costs per unit for a special part for its main product are as follows: direct materials, $1; direct labor, $10; variable overhead, $5; and fixed overhead, $8. Let-Me-Help Company has contacted All-Alone with an offer to sell them 5,000 of the special parts for $22 each. All-Alone will eliminate $25,000 of fixed overhead if it accepts the proposal. What are the relevant internal costs for All-Alone?

FINANCIAL ACCOUNTING
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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All-Alone Inc has always manufactured its own parts. The costs per unit for a special part for its main product are as follows: direct materials, $1; direct labor, $10; variable overhead, $5; and fixed overhead, $8. Let-Me-Help Company has contacted All-Alone with an offer to sell them 5,000 of the special parts for $22 each. All-Alone will eliminate $25,000 of fixed overhead if it accepts the proposal. What are the relevant internal costs for All-Alone? Multiple Choice О $80,000 none of the answers are correct $125,000 $140,000 $105,000
Transcribed Image Text:All-Alone Inc has always manufactured its own parts. The costs per unit for a special part for its main product are as follows: direct materials, $1; direct labor, $10; variable overhead, $5; and fixed overhead, $8. Let-Me-Help Company has contacted All-Alone with an offer to sell them 5,000 of the special parts for $22 each. All-Alone will eliminate $25,000 of fixed overhead if it accepts the proposal. What are the relevant internal costs for All-Alone? Multiple Choice О $80,000 none of the answers are correct $125,000 $140,000 $105,000
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