The Outland Company manufactures 5,000 units of a part that could be purchased from an outside supplier for $16 each. Outland’s costs to manufacture each part are as follows: Direct materials $4 Direct labor 3 Variable manufacturing overhead 6 Fixed manufacturing overhead 10 Total $23 All fixed overhead is unavoidable and is allocated based on direct labor. The facilities that are used to manufacture the part have no alternative uses. (a-b) Correct answer icon Your answer is correct. (a) Calculate relevant cost to make. Relevent cost to make $enter relevent cost to make in dollars per unit per unit (b) Should Outland continue to manufacture the part? select an option eTextbook and Media Attempts: unlimited (c-d) (c) If Outland could lease the manufacturing facilities to another company for $25,000 per year, what would be the net total cost to outsource production of the part? Net cost to buy $enter the net cost to buy in dollars
The Outland Company manufactures 5,000 units of a part that could be purchased from an outside supplier for $16 each. Outland’s costs to manufacture each part are as follows: Direct materials $4 Direct labor 3 Variable manufacturing overhead 6 Fixed manufacturing overhead 10 Total $23 All fixed overhead is unavoidable and is allocated based on direct labor. The facilities that are used to manufacture the part have no alternative uses. (a-b) Correct answer icon Your answer is correct. (a) Calculate relevant cost to make. Relevent cost to make $enter relevent cost to make in dollars per unit per unit (b) Should Outland continue to manufacture the part? select an option eTextbook and Media Attempts: unlimited (c-d) (c) If Outland could lease the manufacturing facilities to another company for $25,000 per year, what would be the net total cost to outsource production of the part? Net cost to buy $enter the net cost to buy in dollars
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
The Outland Company manufactures 5,000 units of a part that could be purchased from an outside supplier for $16 each. Outland’s costs to manufacture each part are as follows:
All fixed overhead is unavoidable and is allocated based on direct labor. The facilities that are used to manufacture the part have no alternative uses.
| Direct materials | $4 | ||
| Direct labor | 3 | ||
| Variable manufacturing overhead | 6 | ||
| Fixed manufacturing overhead | 10 | ||
| Total | $23 |
All fixed overhead is unavoidable and is allocated based on direct labor. The facilities that are used to manufacture the part have no alternative uses.
(a-b)
Correct answer icon
Your answer is correct.
(a) Calculate relevant cost to make.
(b) Should Outland continue to manufacture the part?
| Relevent cost to make | $enter relevent cost to make in dollars per unit per unit |
(b) Should Outland continue to manufacture the part?
| select an option |
eTextbook and Media
Attempts: unlimited
(c-d)
(c) If Outland could lease the manufacturing facilities to another company for $25,000 per year, what would be the net total cost to outsource production of the part?
(d) Should Outland outsource production of the part given the opportunity to lease the facilities?
| Net cost to buy | $enter the net cost to buy in dollars |
(d) Should Outland outsource production of the part given the opportunity to lease the facilities?
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