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Home Q & A Board Other Fields Homework Help Business Accounting
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bernie2981 bernie2981
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Posts: 3810
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8 years ago
Moon Appliance manufactures a variety of appliances which all use Part B89. Currently, Moon Appliance manufactures Part B89 itself. It has been producing 9,000 units of Part B89 annually. The annual costs of producing 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 is the highest price per unit that Moon Appliance should be willing to pay for the part?
A) $18
B) $15
C) $7
D) $11
Textbook 
Managerial Accounting

Managerial Accounting


Edition: 4th
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nucleinuclei
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8 years ago
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bernie2981 Author
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#2
8 years ago
You're such a dedicated member, I very much appreciate the help.

Marking this solved ✓
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#3
3 years ago
thnks
wrote...
#4
3 years ago
Ok
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