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An outside manufacturer has offered to produce Daks and ship them directly to Andretti
Solution
The unit cost that is relevant for comparison to the price quoted by the outside manufacturer
Answer
Unit cost that is relevant for comparison to the price quoted by the outside manufacturer =
$ 24.45
Direct materials 10.00
Direct labor 4.50
Variable manufacturing overhead 2.30
Fixed manufacturing overhead (5*75%) 3.75
Variable selling expenses ( 1.20 - 2/3*1.20) 0.40
Fixed selling expenses (Avoiidable) 3.50
Total Relevant cost per unit 24.45

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An outside manufacturer has offered to produce Daks and ship them dire.docx

  • 1. An outside manufacturer has offered to produce Daks and ship them directly to Andretti Solution The unit cost that is relevant for comparison to the price quoted by the outside manufacturer Answer Unit cost that is relevant for comparison to the price quoted by the outside manufacturer = $ 24.45 Direct materials 10.00 Direct labor 4.50 Variable manufacturing overhead 2.30 Fixed manufacturing overhead (5*75%) 3.75 Variable selling expenses ( 1.20 - 2/3*1.20) 0.40 Fixed selling expenses (Avoiidable) 3.50 Total Relevant cost per unit 24.45