Question 15

using the information below.

Schmidt Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows: Direct materials $45,000 Direct labour 65,000 Variable factory overhead 30,000 Fixed factory overhead 70,000 Total costs $210,000 Of the fixed factory overhead costs, $30,000 is avoidable. Assuming accepting the offer creates excess facility capacity that can be used to produce 2,000 units of another product that has a unit selling price of $24, variable costs of $12, and fixed cost allocation of $3.

What is the highest price that Schmidt should be willing to pay Phil Company for 10,000 units of the part?

Question 15 options:

1-$146,000

2-$134,000

3-$140,000

4-$152,000

5-$164,000