View the step-by-step solution to: The Gorga Corporation produces 15,000 units of item QT34 annually

The Gorga Corporation produces 15,000 un...
The Gorga Corporation produces 15,000 units of item QT34 annually at a total cost of $600,000.
Direct materials $60,000
Direct labor 165,000
Manufacturing overhead 375,000
Total $600,000
Manufacturing overhead is 36% variable. The Roseland Corporation has offered to supply all 15,000 units of QT34 per year for $35 per unit. If Gorga accepts the offer, $8 per unit of the fixed overhead would be avoided. In addition, some of Gorga's leased facilities could be vacated, reducing lease payments by $90,000 per year.

Requirements
By how much would Gorga's profits change if 15,000 of part QT34 are purchased from Roseland?

At what price would Gorga be indifferent to Roseland's offer?

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors and customizable flashcards—available anywhere, anytime.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access or to earn money with our Marketplace.

    Browse Documents
  • 890,990,898

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
  • 890,990,898

    Flashcards

    Browse existing sets or create your own using our digital flashcard system. A simple yet effective studying tool to help you earn the grade that you want!

    Browse Flashcards