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Moon Appliance manufactures a variety of appliances which all use Part B89. Currently, Moon Applianc

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Moon Appliance manufactures a variety of appliances which all use Part B89. Currently, Moon Applianc

Moon Appliance manufactures a variety of appliances which all use Part B89. Currently, Moon Appliance manufactures Part B89 in its internal manufacturing process. Moon Appliance produces 9,000 units of Part B89 annually. The annual costs to product Part B89 at the level of 9,000 units include:

Direct materials   $3.00
Direct labor   $8.00
Variable manufacturing overhead   $4.00
Fixed manufacturing overhead   $3.00
Total cost   $18.00

All of the fixed manufacturing overhead costs would continue whether Part B89 is made internally or purchased from an outside supplier. Moon Appliance has no alternative use for its manufacturing facilities. Nadal Parts Company has offered to sell 9,000 units of Part B89 to Moon Appliance for $20.00 per unit. What should Moon Appliance do?
A) Buy from Nadal Parts Company and lose $2 per unit.
B) Make the part and save $5 per unit.
C) Make the part and save $9 per unit.
D) Make the part and save $13 per unit.

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Managerial Accounting

Edition: 4^th

Author: Braun

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bernie2981 Author

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8 years ago

Good timing, thanks!

bahajo

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Yesterday

Helped a lot

oscar520000

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2 hours ago

Thanks

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