unit product cost
Not what you're looking for?
Managerial Accounting
--------------------------------------------------------------------------------
Ahringer Company makes 50,000 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 19.10
Direct labor 21.70
Variable manufacturing overhead 2.10
Fixed manufacturing overhead 14.20
Unit product cost 57.10
An outside supplier has offered to sell the company all of these parts it needs for 50.10 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 135,000 per year.
If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, 9.30 of the fixed manufacturing overhead cost being applied to the part would 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.
Reference: 13-8
How much of the unit product cost of 57.10 is relevant in the decision of whether to make or buy the part?
57.10
21.70
42.90
47.80
Purchase this Solution
Solution Summary
This provides the steps to calculate the unit product cost
Solution Preview
How much of the unit product cost of 57.10 is relevant in the ...
Purchase this Solution
Free BrainMass Quizzes
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.