HGB Company manufactures a part for use in its production of hats. When 10,000 items are produced, the costs per unit ar
Posted: Thu May 19, 2022 2:22 pm
HGB Company manufactures a part for
use in its production of hats. When 10,000 items are produced, the
costs per unit are:
Direct
materials
$0.60
Direct manufacturing
labor
3.00
Variable manufacturing
overhead 1.20
Fixed manufacturing
overhead
1.60
Total
$6.40
LKN Company has
offered to sell to HGB Company 10,000 units of the part for $6.00
per unit. The plant facilities could be used to manufacture another
item at a savings of $9,000 if HGB accepts the offer. In addition,
$1.00 per unit of fixed manufacturing overhead on the original item
would be eliminated.
Required:
use in its production of hats. When 10,000 items are produced, the
costs per unit are:
Direct
materials
$0.60
Direct manufacturing
labor
3.00
Variable manufacturing
overhead 1.20
Fixed manufacturing
overhead
1.60
Total
$6.40
LKN Company has
offered to sell to HGB Company 10,000 units of the part for $6.00
per unit. The plant facilities could be used to manufacture another
item at a savings of $9,000 if HGB accepts the offer. In addition,
$1.00 per unit of fixed manufacturing overhead on the original item
would be eliminated.
Required: