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Author Question: McMurphy Corporation produces a part that is used in the manufacture of one of its products. The ... (Read 131 times)

Pea0909berry

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McMurphy Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 12,000 units of this part are as follows:

Direct materials$86,000
Direct labor126,000
Variable factory overhead58,000
Fixed factory overhead138,000
Total costs$408,000

Of the fixed factory overhead costs, $55,000 is avoidable.  Conners Company has offered to sell 12,000 units of the same part to McMurphy Corporation for $41 per unit.

 Assuming there is no other use for the facilities, Schmidt should ________.
◦ make the part, as this would save $16 per unit
◦ buy the part, as this would save $16 per unit
◦ buy the part, as this would save the company $192,000
◦ make the part, as this would save $14 per unit


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Marked as best answer by Pea0909berry on Mar 6, 2021

mjenn52

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Pea0909berry

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Reply 2 on: Mar 6, 2021
Thanks for the timely response, appreciate it


hollysheppard095

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Reply 3 on: Yesterday
Great answer, keep it coming :)

 

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