Clifton Clocks has offered to provide the timer units to Carla Vista at a price of $33 per unit. If Carla Vista accepts the offer, the current timer unit supervisory and clerical staff will be laid off. Assume that if Carla Vista Water accepts Clifton's offer, the company can use the freed-up manufacturing facilities to manufacture a new line of growing lights. The company estimates it can sell 83,890 of the new lights each year at a price of $10. Variable costs of the lights are expected to be $7 per unit. The timer unit supervisory and clerical staff would be transferred to this new product line. Calculate the total relevant cost to make the timer units and the net cost if they accept Clifton's offer. Total relevant cost to make Net relevant cost if they accept Clifton's offer Senter a dollar amount $enter a dollar amount
Clifton Clocks has offered to provide the timer units to Carla Vista at a price of $33 per unit. If Carla Vista accepts the offer, the current timer unit supervisory and clerical staff will be laid off. Assume that if Carla Vista Water accepts Clifton's offer, the company can use the freed-up manufacturing facilities to manufacture a new line of growing lights. The company estimates it can sell 83,890 of the new lights each year at a price of $10. Variable costs of the lights are expected to be $7 per unit. The timer unit supervisory and clerical staff would be transferred to this new product line. Calculate the total relevant cost to make the timer units and the net cost if they accept Clifton's offer. Total relevant cost to make Net relevant cost if they accept Clifton's offer Senter a dollar amount $enter a dollar amount
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![company manufactures the timer unit used in each of its systems. Based on an annual
production of 49,500 timers, the company has calculated the following unit costs. Direct fixed
costs include supervisory and clerical salaries and equipment depreciation.
Direct materials
$11
Direct labor
Variable manufacturing overhead
3
Direct fixed manufacturing overhead
8
Allocated fixed manufacturing overhead 6
Total unit cost
$35
7
(30% salaries, 70% depreciation)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7f57dbad-1fbf-4bf1-ba9b-b6fe3a38ea2b%2Fbd25b710-6475-4f99-9e29-8de4177b2233%2Fwhvoh0e_processed.png&w=3840&q=75)
Transcribed Image Text:company manufactures the timer unit used in each of its systems. Based on an annual
production of 49,500 timers, the company has calculated the following unit costs. Direct fixed
costs include supervisory and clerical salaries and equipment depreciation.
Direct materials
$11
Direct labor
Variable manufacturing overhead
3
Direct fixed manufacturing overhead
8
Allocated fixed manufacturing overhead 6
Total unit cost
$35
7
(30% salaries, 70% depreciation)
![Clifton Clocks has offered to provide the timer units to Carla Vista at a price of $33 per unit. If
Carla Vista accepts the offer, the current timer unit supervisory and clerical staff will be laid
off.
Assume that if Carla Vista Water accepts Clifton's offer, the company can use the freed-up
manufacturing facilities to manufacture a new line of growing lights. The company estimates
it can sell 83,890 of the new lights each year at a price of $10. Variable costs of the lights are
expected to be $7 per unit. The timer unit supervisory and clerical staff would be transferred
to this new product line. Calculate the total relevant cost to make the timer units and the net
cost if they accept Clifton's offer.
Total relevant cost to make
Net relevant cost if they accept Clifton's offer
Senter a dollar amount
Senter a dollar amount](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7f57dbad-1fbf-4bf1-ba9b-b6fe3a38ea2b%2Fbd25b710-6475-4f99-9e29-8de4177b2233%2Fddudz2_processed.png&w=3840&q=75)
Transcribed Image Text:Clifton Clocks has offered to provide the timer units to Carla Vista at a price of $33 per unit. If
Carla Vista accepts the offer, the current timer unit supervisory and clerical staff will be laid
off.
Assume that if Carla Vista Water accepts Clifton's offer, the company can use the freed-up
manufacturing facilities to manufacture a new line of growing lights. The company estimates
it can sell 83,890 of the new lights each year at a price of $10. Variable costs of the lights are
expected to be $7 per unit. The timer unit supervisory and clerical staff would be transferred
to this new product line. Calculate the total relevant cost to make the timer units and the net
cost if they accept Clifton's offer.
Total relevant cost to make
Net relevant cost if they accept Clifton's offer
Senter a dollar amount
Senter a dollar amount
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