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Author Question: Rockford Company manufactures a part for use in its production of hats. When 10,000 items are ... (Read 53 times)

asmith134

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Rockford Company manufactures a part for use in its production of hats. When 10,000 items are produced, the costs per unit are: 

Direct materials$0.75
Direct manufacturing labor3.00
Variable manufacturing overhead1.50
Fixed manufacturing overhead1.60
Total$6.85

Angel Company has offered to sell to Rockford Company 10,000 units of the part for $6.00 per unit. The plant facilities could be used to manufacture another item at a savings of $9,000 if Rockford accepts the offer. In addition, $1.00 per unit of fixed manufacturing overhead on the original item would be eliminated. 

Required: 
a.What is the relevant per unit cost for the original part?
b.Which alternative is best for Rockford Company? By how much?


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Marked as best answer by asmith134 on Mar 6, 2021

aruss1303

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asmith134

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


Laurenleakan

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Reply 3 on: Yesterday
Excellent

 

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