General accounting question Vanguard Systems manufactures a component used in one of its products. Thecosts associated with producing 18,000 units of this component are as follows:⚫ Direct materials: 120.000 CAD.Direct labor: 180,000 CAD•.Variable factory overhead: 72,000 CADFixed factory overhead: 150,000 CAD⚫ Total costs: 522,000 CAD•Of the fixed factory overhead costs, 90,000 CAD is avoidable. Assuming noother use of their facilities, what is the highest price Vanguard Systems shouldbe willing to pay to purchase the 18,000 units of this component externally?a) 450,000 CADb) 462,000 CADc) 475,000 CADd) 480,000 CAD

Step 1: Definition of Relevant CostRelevant cost refers to any cost that will change as a result of…

Answered: Vanguard Systems manufactures a…

Principles of Accounting Volume 2

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Chapter6: Activity-based, Variable, And Absorption Costing

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Problem 14EA: Cool Pool has these costs associated with production of 20,000 units of accessory products: direct...

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Please explain it properly
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