The Planife company manufactures part G which is used in the manufacture of its finished product. The unit cost for manufacturing 10,000 units of part G is as follows:

Raw materials $3

Direct labor 15

Variable indirect manufacturing costs 6

Fixed indirect manufacturing costs 8

Total $32

 

The Verona company offered to sell 10,000 units of part G to Planife at a price of $30 per unit. If Planife accepts Verona's offer, the freed-up facilities can be used to save $45,000 in relevant costs in the manufacturing of part G. In addition, an amount of $5 in indirect fixed manufacturing costs specific to the part G could be completely eliminated. what alternative is the most interesting for Planife, and by what amount?

 

 

 

Answer rating: 100% (QA)

To determine which alternative is the most costeffective for Planife manufacturing Part G inhouse or ... View the full answer