Need help Striker Corporation produces a part that is used in the manufacture of one ofits products. The costs associated with the production of 12,000 units of thispart are as follows:Direct materials86,000 euroDirect labor130,000 euroVariable factory overhead 57,000 euroFixed factory overheadTotal costs135,000 euro408,000 euroOf the fixed factory overhead costs, 63,000 euros is avoidable. Assuming noother use of their facilities, the highest price that McMurphy should be willingto pay to buy externally 12,000 units of the part isa. 273,000 eurob. 345,000 euroc. 408,000 eurod. 336,000 euro

Step 1: Define Differential AnalysisDifferential analysis is used to choose the best alternative…

Answered: Striker Corporation produces a part…

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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Jensen Corporation produces a part for use in the production of one of its products. The per-unit costs associated with the annual production of 1,000 units of this part are as follows: Direct materials Direct labor Variable factory overhead Fixed factory overhead Total costs $5.25 $12.00 $2.75 $6.00 $26.00 $2,500 of the fixed factory overhead costs associated with the production of this product are common fixed costs. Wells Company has offered to sell 1,000 units of the same part to Jensen Corporation for $21 per unit. Jensen should: Select one: O a. Buy the part, because this would save the company $5.00 per unit. O b. Make the part, because this would save the company $1.00 per unit. O c. Make the part, because this would save the company $2,500 annually. O d. Buy the part, because this would save the company $2,500 annually.
What are the fixed overhead costs of making the component?
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