Exercise 8-10 Every year Concord Industries manufactures 10,000 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: Direct materials $ 4 Direct labor 9 Variable manufacturing overhead 7 Fixed manufacturing overhead 10 Total $30 Flintrock, Inc., has offered to sell 10,000 units of part 231 to Concord for $32 per unit. If Concord accepts Flintrock’s offer, its freed-up facilities could be used to earn $11,700 in contribution margin by manufacturing part 240. In addition, Concord would eliminate 40% 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 $Enter total relevant cost to make in dollars Net relevant cost to buy $Enter net relevant cost to buy in dollars (b) Should Concord accept Flintrock’s offer?Select an option YesNo Click if you would like to Show Work for this question: Open Show Work
Exercise 8-10 Every year Concord Industries manufactures 10,000 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: Direct materials $ 4 Direct labor 9 Variable manufacturing overhead 7 Fixed manufacturing overhead 10 Total $30 Flintrock, Inc., has offered to sell 10,000 units of part 231 to Concord for $32 per unit. If Concord accepts Flintrock’s offer, its freed-up facilities could be used to earn $11,700 in contribution margin by manufacturing part 240. In addition, Concord would eliminate 40% 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 $Enter total relevant cost to make in dollars Net relevant cost to buy $Enter net relevant cost to buy in dollars (b) Should Concord accept Flintrock’s offer?Select an option YesNo Click if you would like to Show Work for this question: Open Show Work
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 8-10
Every year Concord Industries manufactures 10,000 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows:
Flintrock, Inc., has offered to sell 10,000 units of part 231 to Concord for $32 per unit. If Concord accepts Flintrock’s offer, its freed-up facilities could be used to earn $11,700 in contribution margin by manufacturing part 240. In addition, Concord would eliminate 40% of the fixed overhead applied to part 231.
(a) Calculate total relevant cost to make and net cost to buy.
(b) Should Concord accept Flintrock’s offer?
Select an option
| Direct materials | $ 4 | ||
| Direct labor | 9 | ||
| Variable manufacturing |
7 | ||
| Fixed manufacturing overhead | 10 | ||
| Total | $30 |
Flintrock, Inc., has offered to sell 10,000 units of part 231 to Concord for $32 per unit. If Concord accepts Flintrock’s offer, its freed-up facilities could be used to earn $11,700 in contribution margin by manufacturing part 240. In addition, Concord would eliminate 40% 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 | $Enter total relevant cost to make in dollars
|
| Net relevant cost to buy | $Enter net relevant cost to buy in dollars
|
(b) Should Concord accept Flintrock’s offer?
Select an option
YesNo
| Click if you would like to Show Work for this question: |
Open Show Work
|
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