NUBD Co. manufactures Part 123 for use in its production cycle. The cost per unit for 20,000 units of Part 123 are as follows: Direct materials Direct labor P6 P30 Variable overhead P12 P16 Fixed overhead applied BDX Co. has offered to sell 20,000 units of Part 123 to NUBD Co. for P60 per unit. NUBD Co. will make the decision to buy the part from BDX Co. if there is a savings of P25,000 for NUBD Co. If NUBD Co. accepts BDX's offer, P9 per unit of the fixed overhead applied would totally be eliminated. Furthermore, NÚBD Co. has determined that the released facilities could be used to save relevant costs in the manufacture of Part 456.

NUBD Co. manufactures Part 123 for use in its production cycle. The cost per unit for 20,000 units of Part 123 are as follows: Direct materials Direct labor P6 P30 Variable overhead P12 P16 Fixed overhead applied BDX Co. has offered to sell 20,000 units of Part 123 to NUBD Co. for P60 per unit. NUBD Co. will make the decision to buy the part from BDX Co. if there is a savings of P25,000 for NUBD Co. If NUBD Co. accepts BDX's offer, P9 per unit of the fixed overhead applied would totally be eliminated. Furthermore, NÚBD Co. has determined that the released facilities could be used to save relevant costs in the manufacture of Part 456.

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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