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Calculate total relevant cost to make and net cost to buy

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Reference no: EM132986715

Question - Every year Flint Industries manufactures 7,600 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows:

Direct materials $3.00

Direct labor 9.00

Variable manufacturing overhead 7.00

Fixed manufacturing overhead 10.00

Total $29.00

Sandhill, Inc., has offered to sell 7,600 units of part 231 to Flint for $33 per unit. If Flint accepts Sandhill's offer, its freed-up facilities could be used to earn $12,500 in contribution margin by manufacturing part 240. In addition, Flint would eliminate 50% of the fixed overhead applied to part 231.

Required - Calculate total relevant cost to make and net cost to buy.

Reference no: EM132986715

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