Bonita's Shop can make 1000 units of a necessary component with the following costs: Direct Materials $32000 Direct Labor 6000 Variable Overhead Fixed Overhead 3000 The company can purchase the 1000 units externally for $47000. The unavoidable fixed costs are $2000 if the units are purchased externally. An analysis shows that at this external price, the company is indifferent between making or buying the part. What are the foxed overhead costs of making the component? O $8000 O $4000 O Cannot be determined O $6000

Bonita's Shop can make 1000 units of a necessary component with the following costs: Direct Materials $32000 Direct Labor 6000 Variable Overhead Fixed Overhead 3000 The company can purchase the 1000 units externally for $47000. The unavoidable fixed costs are $2000 if the units are purchased externally. An analysis shows that at this external price, the company is indifferent between making or buying the part. What are the foxed overhead costs of making the component? O $8000 O $4000 O Cannot be determined O $6000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 1PA: The following product Costs are available for Haworth Company on the production of chairs: direct...

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A company is considering a special order for 1,000 units to be priced at 8.90 (the normal price would be 11.50). The order would require specialized materials costing 4.00 per unit. Direct labor and variable factory overhead would cost 2.15 per unit. Fixed factory overhead is 1.20 per unit. However, the company has excess capacity, and acceptance of the order would not raise total fixed factory overhead. The warehouse, however, would have to add capacity costing 1,300. Which of the following is relevant to the special order? a. 11.50 b. 1.20 c. 7.35 d. 8.90
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What are the fixed overhead costs of making the component?
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Please explain it properly
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