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Author Question: Lewis S. Gray Inc. manufactures a part for use in its production of art deco furniture. When 10,000 ... (Read 101 times)

clmills979

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Question 1

How does a manager go about choosing which of three products to produce and sell when each product uses a single machine with a limited capacity?

Question 2

Lewis S. Gray Inc. manufactures a part for use in its production of art deco furniture. When 10,000 items are produced, the costs per unit are: 

Direct materials$ 15
Direct manufacturing labor60
Variable manufacturing overhead25
Fixed manufacturing overhead32
Total$132

Colonial Accents Company has offered to sell to Lewis S. Gray 10,000 units of the part for $125 per unit. The plant facilities could be used to manufacture another part at a savings of $180,000 if Lewis S. Gray accepts the supplier's offer. In addition, $30 per unit of fixed manufacturing overhead on the original part would be eliminated. 

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


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Marked as best answer by clmills979 on Mar 6, 2021

okolip

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clmills979

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Reply 2 on: Mar 6, 2021
YES! Correct, THANKS for helping me on my review


meganmoser117

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

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