Benson Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-quality...
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Benson Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racing bikes with limited sales. Benson produces and sells only 6,900 bikes each year. Due to the low volume of activity, Benson is unable to obtain the economies of scale that larger producers achieve. For example, Benson could buy the handlebars for $38 each; they cost $41 each to make. The following is a detailed breakdown of current production costs. Item Unit-level costs. Materials Labor Overhead Allocated facility- level costs Total Unit Cost $16 10 2 13 $41 After seeing these figures, Benson's president remarked that it would be foolish for the company to continue to produce the handlebars at $41 each when it can buy them for $38 each. Total $110,400 69,000 13,800 89,700 $282,900 Required Calculate the total relevant cost. Do you agree with the president's conclusion? Per Unit Total relevant cost Do you agree with the president's conclusion? Total Benson Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racing bikes with limited sales. Benson produces and sells only 6,900 bikes each year. Due to the low volume of activity, Benson is unable to obtain the economies of scale that larger producers achieve. For example, Benson could buy the handlebars for $38 each; they cost $41 each to make. The following is a detailed breakdown of current production costs. Item Unit-level costs. Materials Labor Overhead Allocated facility- level costs Total Unit Cost $16 10 2 13 $41 After seeing these figures, Benson's president remarked that it would be foolish for the company to continue to produce the handlebars at $41 each when it can buy them for $38 each. Total $110,400 69,000 13,800 89,700 $282,900 Required Calculate the total relevant cost. Do you agree with the president's conclusion? Per Unit Total relevant cost Do you agree with the president's conclusion? Total
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Related Book For
Fraud examination
ISBN: 978-0538470841
4th edition
Authors: Steve Albrecht, Chad Albrecht, Conan Albrecht, Mark zimbelma
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