Author Question: McMurphy Corporation produces a part that is used in the manufacture of one of its products. The ... (Read 127 times)

Pea0909berry · **on:** Mar 6, 2021

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 labor

126,000

Variable factory overhead

58,000

Fixed factory overhead

138,000

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

mjenn52 · **Reply #1 on:** Mar 6, 2021

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