Calculate the total relevant costs

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Question - Janice Foeld Company manufactures part Z for use in its production cycle. The costs per unit for 10,000 units of part Z are as follows.

Direct materials

$3

Direct labor

15

Variable overhead

6

Fixed overhead

8

TOTAL

$32

Baloney Company has offered to sell Janice Foeld 10,000 units of part Z for $30 per unit. If Janice Foeld accepts Baloney's offer, the released facilities can be used to save $45,000 in relevant costs in the manufacture of part A. In addition, $5 per unit of the fixed overhead applied to part Z would be totally eliminated.

The total relevant costs to buy part Z are

a) $320,000.

b) $300,000.

c) $290,000.

d) $255,000.

Reference no: EM132066000

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