Lewis Auto Company: Relative Per Unit Cost

Related BrainMass Solutions

• Relevant per unit cost. Which alternative is best ?

  332514 Lewis Auto Company: Relevant per unit cost. Which alternative is best? Lewis Auto Company manufactures a part for use in its production of automobiles.

• Cost Accounting Explained in this Solution

  The net cost of purchase is 1,020,000 of $102 per unit. Making the part has a cost of $116 per unit. Lewis Auto should purchase the part and save $14 per part or $140,000 in total.

• Managerial Accounting-Budgeting

  Lewis company: production and sales information for Lewis Company.

• Behavioral, variable, income statement CVP for Lewis Company

  Breakeven in units is computed and then done again with the $20 increase in variable cost per unit (materials).

• Lewis Company Product C impact on profits

  The new customer is only willing to pay $180 per unit, direct materials costs will decrease by $15 per unit and Lewis does not have to incur any variable selling and administrative expenses.

• Differential analysis: Lewis Company

  If Lewis accepts the special order, it will cost $105 per unit in material, $60 per unit in labor and $40 per unit in variable overhead. So, these are all relevant.

• Differential analysis for the Lewis Company

  The new customer is only willing to pay $245 per unit, direct materials costs will decrease by $15 per unit and Lewis does not have to incur any variable selling and administrative expenses.

• SLP Lewis Company Special Order Decision Product C

  If Lewis accepts the special order, it will cost $105 per unit in material, $60 per unit in labor and $40 per unit in variable overhead. So, these are all relevant.

• Differential analysis: Lewis Company

  Lewis Company Special Order Relevant costs Relevant cost change with the decision. Variable costs are relevant because they go up with a change in activity.