Solution-Fixed factory overhead costs

Fixed factory overhead costs

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Reference no: EM13303770

Lakers Company manufactures a part for its production cycle. The costs per unit for 5,000 units of this part are as follows:

Direct materials	$3
Direct labor	$5
Variable factory overhead	$4
Fixed factory overhead	$2
Total costs	$14

The fixed factory overhead costs are unavoidable.

Assume that Lakers Company has been offered 5,000 units of the part from another producer for $14 each. The facilities currently used could be used to make 5,000 units of a product that would contribute $5 a unit to cover fixed expenses.

make the new product and buy the part to earn an extra $3 per unit contribution to profit

make the new product and buy the part to earn an extra $1 per unit contribution to profit

continue to make the part to earn an extra $1 per unit contribution to profit

continue to make the part to earn an extra $3 per unit contribution to profit

Attachment:- MA-Assign3.doc

Reference no: EM13303770

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Fixed factory overhead costs

Reference no: EM13303770

Reference no: EM13303770

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