Sent Designs requires three units of part A for every unit of A1 that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 3,900 units were produced: Direct materials $4.00 Direct labor 1.40 Manufacturing overhead 1.30 Total variable manufacturing overhead is applied at $1.00 per unit. The other $0.30 of overhead consists of allocated fixed costs. Gent will need 6,200 units of part A for the next year's production Cory Corporation has offered to supply 6,200 units of part A at a price of $6.90 per unit. If Gent accepts the offer, all of the variable costs and $1,170 of the fixed costs will be avoided. A. Calculate the differential cost? 42,780 ✔ Cost to buy Cost to make Differential cost $6.70 B. Should Gent Designs accept the offer from Cory Corporation? Sent Designs should not accept the offer. -✓

Sent Designs requires three units of part A for every unit of A1 that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 3,900 units were produced: Direct materials $4.00 Direct labor 1.40 Manufacturing overhead 1.30 Total variable manufacturing overhead is applied at $1.00 per unit. The other $0.30 of overhead consists of allocated fixed costs. Gent will need 6,200 units of part A for the next year's production Cory Corporation has offered to supply 6,200 units of part A at a price of $6.90 per unit. If Gent accepts the offer, all of the variable costs and $1,170 of the fixed costs will be avoided. A. Calculate the differential cost? 42,780 ✔ Cost to buy Cost to make Differential cost $6.70 B. Should Gent Designs accept the offer from Cory Corporation? Sent Designs should not accept the offer. -✓

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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