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The Sarasota Company manufactures 5,200 units of a part that could be purchased from an outside supplier for $14 each. Sarasota's costs to manufacture each part are as follows: Direct materials $3 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total $19 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.

The Sarasota Company manufactures 5,200 units of a part that could be purchased from an outside supplier for $14 each. Sarasota's costs to manufacture each part are as follows: Direct materials $3 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total $19 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.

FINANCIAL ACCOUNTING
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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The Sarasota Company manufactures 5,200 units of a part that could be purchased from an outside supplier for $14 each. Sarasota's costs to manufacture each part are as follows: Direct materials $3 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total $19 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.
Transcribed Image Text:The Sarasota Company manufactures 5,200 units of a part that could be purchased from an outside supplier for $14 each. Sarasota's costs to manufacture each part are as follows: Direct materials $3 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total $19 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) Calculate relevant cost to make. Relevent cost to make $ per unit (b) Should Sarasota continue to manufacture the part?
Transcribed Image Text:(a) Calculate relevant cost to make. Relevent cost to make $ per unit (b) Should Sarasota continue to manufacture the part?
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