Operation 1 Operation 2 Operation 3 Total capacity per year 200,000 units 150,000 units 180,000 units Total output per year 150,000 units 150,000 units 150,000 units Fixed cost of operations $1,200,000 $1,800,000 $2,250,000 Question Tullahoma Company has offered to perform the Operation 2 function on 1,000 units at a unit price of $40, excluding direct materials cost. Chattanooga Company has offered to perform the Operation 1 function on 1,000 units at a price of $7, excluding direct materials cost. Chickamauga Company has made an offer to perform the Operation 1 function on 5,000 units at a unit cost of $5 (excluding direct materials cost). Which of these mutually exclusive offers is acceptable to Rosecrans?

Answer rating: 100% (QA)

Analysis of offers Chattanooga Company Performing Opera... View the full answer