Every year Blue Industries manufactures 6,000 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total $3.00 9.00 7.00 10.00 $29.00 Cullumber, Inc., has offered to sell 6,000 units of part 231 to Blue for $33 per unit. If Blue accepts Cullumber's offer, its freed-up facilities could be used to earn $14,800 in contribution margin by manufacturing part 240. In addition, Blue would eliminate 50% of the fixed overhead applied to part 231. (a) Calculate total relevant cost to make and net cost to buy. Total relevant cost to make $ Net relevant cost to buy 198000
Every year Blue Industries manufactures 6,000 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total $3.00 9.00 7.00 10.00 $29.00 Cullumber, Inc., has offered to sell 6,000 units of part 231 to Blue for $33 per unit. If Blue accepts Cullumber's offer, its freed-up facilities could be used to earn $14,800 in contribution margin by manufacturing part 240. In addition, Blue would eliminate 50% of the fixed overhead applied to part 231. (a) Calculate total relevant cost to make and net cost to buy. Total relevant cost to make $ Net relevant cost to buy 198000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Every year Blue Industries manufactures 6,000 units of part 231 for use in its production cycle. The per unit costs of part 231 are as
follows:
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Total
$3.00
9.00
7.00
10.00
$29.00
Cullumber, Inc., has offered to sell 6,000 units of part 231 to Blue for $33 per unit. If Blue accepts Cullumber's offer, its freed-up
facilities could be used to earn $14,800 in contribution margin by manufacturing part 240. In addition, Blue would eliminate 50% of
the fixed overhead applied to part 231.
(a) Calculate total relevant cost to make and net cost to buy.
Total relevant cost to make $
Net relevant cost to buy
198000
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