Foto Company makes 12.000 units per year of a part it uses in the pro.docx - Foto Company makes 12.000 units per year of a part it uses in the products

# Foto Company makes 12.000 units per year of a part it uses in the pro.docx

• 3

This preview shows page 1 - 3 out of 3 pages.

Foto Company makes 12.000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost \$12.80 20.4e 2.6e 10.se \$46.30 An outside supplier has offered to sell the company all of these parts it needs for \$41.90 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be \$52,800 per year If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, \$5.60 of the fixed manufacturing overhead cost being applied to the part would

#### You've reached the end of your free preview.

Want to read all 3 pages?

Unformatted text preview: continue even if the part were purchased from the outside supplier This fixed manufacturing overhead cost would be applied to the company's remaining products Required a. How much of the unit product cost of \$46 30 is relevant in the decision of whether to make or buy the part? (Round &quot;Per Unit&quot; to 2 decimal places ) b. What is the financial advantage (disadvantage) of purchasing the part rather than making it c. What is the maximum amount the company should be wiling to pay an outside supplier per unit for the part f the supplier commits to supplying all 12.000 units required each year? (Round &quot;Per Unit&quot; to 2 decimal places) a Relevant manulacturing cost per unit b c Maximum acceptable purchase price per unit...
View Full Document

• Spring '17
• DEBORAHGOLDSMITH

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern