QUESTION 3 [same info, different question] Sarah makes cookies. She normally produces 10,000 cookies a month...

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QUESTION 3 [same info, different question] Sarah makes cookies. She normally produces 10,000 cookies a month and incurs the following costs: direct material $0.05 per cookie, direct labor $0.01 per cookie, variable overhead $0.08 per cookie, and fixed overhead of $3,000. Thus, the average total cost per cookie is $0.44. A supplier has offered to produce her cookies for her for $0.30 each. Sarah thinks $1,000 of her fixed overhead can be avoided if she accepts the offer. At what price would Sarah be indifferent to the offer (she could either accept or reject the offer)? QUESTION 3 [same info, different question] Sarah makes cookies. She normally produces 10,000 cookies a month and incurs the following costs: direct material $0.05 per cookie, direct labor $0.01 per cookie, variable overhead $0.08 per cookie, and fixed overhead of $3,000. Thus, the average total cost per cookie is $0.44. A supplier has offered to produce her cookies for her for $0.30 each. Sarah thinks $1,000 of her fixed overhead can be avoided if she accepts the offer. At what price would Sarah be indifferent to the offer (she could either accept or reject the offer)?

Answer rating: 100% (QA)

Indifferent price is the price at which Relevant cost ... View the full answer