Part P40 is a part used in the production of air conditioners at Jackson Corporation. The following
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Question:
Part P40 is a part used in the production of air conditioners at Jackson Corporation. The following costs and data relate to the production of Part P40:
Number of parts produced annually ……………. 26,000
Fixed costs ……………………………………… $43,000
Variable costs …………………………………… $69,000
Total cost to produce ……………………………. $112,000
Jackson Corporation can purchase the part from an outside supplier for $4.34 per unit. If they purchase from the outside supplier, 50% of the fixed costs would be avoided. If Jackson Corporation buys the part, what is the most Jackson Corporation can spend per unit so that operating income is equal to $100,0007
A. $2.19
B. $3.02
C. $1.32
D. $3.85
Related Book For
Cornerstones of Cost Management
ISBN: 978-1285751788
3rd edition
Authors: Don R. Hansen, Maryanne M. Mowen
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