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Question - Thermal Mugs, Inc., manufactures various types of leak-proof personal drink carriers. Thermal's T6 container, its most insulated carrier, maintains the temperature of the liquid inside for 6 hours. Thermal has designed a new lid for the T6 carrier that allows for easier drinking and pouring. The cost to produce the new lid is:
Direct materials $2
Direct labor $6
Fixed overhead per unit $8
Variable fixed overhead per unit 4
Plato Plastics has approached Thermal and offered to produce the 120,000 lids Thermal will require for current production levels of the T6 carrier, at a unit price of $16 each. What are the total relevant costs to buy from Plato?
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