Fill in the blank question. Jackson Corporation currently makes Part #300, used in its manufacturing of engines. At 15,000 units, the total cost of making Part #300 is $129,000, computed as follows: Direct Labor = $30,000 ($2 per unit) Direct Materials = $60,000 ($4 per unit) Variable Overhead = $24,000 ($1.60 per unit) Fixed Overhead = $15,000 An outside vendor has offered to supply Jackson with 15,000 units of Part #300 for $123,000. If the company accepts the offer, its fixed overhead costs will be reduced by $6,000. 1. If Jackson buys the parts instead of continuing to manufacture them, its costs will increase by $ . 2. At a total purchase price of $ , the company would be indifferent between making or buying 15,000 units of the part. (Hint: The amount must be less than the current purchase price of $123,000.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Fill in the blank question. Jackson Corporation currently makes Part #300, used in its manufacturing of engines. At 15,000 units, the total cost of making Part #300 is $129,000, computed as follows: Direct Labor = $30,000 ($2 per unit) Direct Materials = $60,000 ($4 per unit) Variable Overhead = $24,000 ($1.60 per unit) Fixed Overhead = $15,000 An outside vendor has offered to supply Jackson with 15,000 units of Part #300 for $123,000. If the company accepts the offer, its fixed overhead costs will be reduced by $6,000. 1. If Jackson buys the parts instead of continuing to manufacture them, its costs will increase by $ . 2. At a total purchase price of $ , the company would be indifferent between making or buying 15,000 units of the part. (Hint: The amount must be less than the current purchase price of $123,000.)
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