Flat Stitch needs three different pieces of material in order to produce one jersey. Currently the material is made by Flat Stitch. During the month of March, Flat Stich produced 4,000 pieces of material. The recorded the following costs: Direct Materials $4.00 Direct Labor $1.50 Manufacturing Overhead $1.30 The manufacturing overhead is made up of $1.00 per unit of variable overhead and $.30 of allocated fixed costs. Flat Stitch determined that they will need to supply 5,000 pieces of material for next years jerseys. Jersey Mike's has offered to sell Flat Stich the material that they need for their jerseys for 57 per unit. If Flat Stich decides to take Jersey Mike's offer, all of the variable costs, and $1200 of the fixed costs will be avoided. Should Flat Stitch accept or decline the offer from Jersey Mike's? Answer:

Flat Stitch needs three different pieces of material in order to produce one jersey. Currently the material is made by Flat Stitch. During the month of March, Flat Stich produced 4,000 pieces of material. The recorded the following costs: Direct Materials $4.00 Direct Labor $1.50 Manufacturing Overhead $1.30 The manufacturing overhead is made up of $1.00 per unit of variable overhead and $.30 of allocated fixed costs. Flat Stitch determined that they will need to supply 5,000 pieces of material for next years jerseys. Jersey Mike's has offered to sell Flat Stich the material that they need for their jerseys for 57 per unit. If Flat Stich decides to take Jersey Mike's offer, all of the variable costs, and $1200 of the fixed costs will be avoided. Should Flat Stitch accept or decline the offer from Jersey Mike's? Answer:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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