Exercise I do not understand, Cost Accounting

Assignment Help:
what would your answer be to the following problem, please show detailed calculations:
The XYZ Company manufacturers Part 123 for use in its production line. The manufacturering cost per unit for 20,000 units of Part 123 is as follows:
Direct Material $6, Direct manufacturing labor $30, Variable manufacturing overhead $12, Fixed manufacturing overhead allocated $16; Total manufacturing cost per unit $64.
The ABC Company has offered to sell 20,000 units of Part 123 to XYZ for $60 per unit. XYZ will make a decision to buy the part from ABC if there is an overall savings of at least $25,000 for XYZ. If XYZ accepts ABC''s offer, $9 per unit of the fixed overhead allocated would be eiliminated. Furthermore, XYZ has determined that the released facilities could be used to save relevant costs in the manufacture of Part 987. For XYZ to achieve an overall savings of $25,000, the amount of revelant costs that would have to be saved by using the released facilties in the manufacturer of Part 987 would be (choose one): (1)$140,000; (2)$125,000; (3)$85,000; (4)$80,000?

Thank You
Michael

Related Discussions:- Exercise I do not understand

Provisions or estimated liabilities, Where the liabilities are identified b...

Where the liabilities are identified but the amounts cannot be precisely found, we estimate the liability and give for it as a liability. A common illustration is income tax payabl

Budgets, how can a poorly controlled budget cause problesm for a business?

how can a poorly controlled budget cause problesm for a business?

Determine expected rate, Bebe, a manufacturer of sophisticated and fas...

Bebe, a manufacturer of sophisticated and fashionable women's clothing, is completing a new assembly plant in Malaysia.  A final construction payment of 6,000,000 MY

Variable production cost , From  the  following  data  write the  standard ...

From  the  following  data  write the  standard  cost  card  for  one  unit  of  the  sole  product manufactured.                                    Standard Cost card for One U

Estimating, how do you calculate estimating cost for the last of the year b...

how do you calculate estimating cost for the last of the year based on activity during the first half of the year

Distribution and selling cost budget, Distribution and Selling Cost Budget ...

Distribution and Selling Cost Budget This is the forecast of all costs incurred in distributing and selling the company's product throughout the budget period. This is closel

Materials mix variance, M aterials mix variance :  It can be described a...

M aterials mix variance :  It can be described as that portion of direct material usage variance which is the variation between the actual quantities of ingredients used in a mi

Bin card, I need an explanation of how a bin card is done

I need an explanation of how a bin card is done

Cash flow budget, the total (ie. aggregated) cashflows in respect to operat...

the total (ie. aggregated) cashflows in respect to operations, with details of annual cash inflows & annual outflows in respect to operations, the total (ie. aggregated) cashflo

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd