Deuce Company Currently Produces 10,000 Units of a Key Part

question 95

Multiple Choice

Deuce Company currently produces 10,000 units of a key part at a total cost of $512,000.Variable costs are $300,000.Of the fixed cost, $140,000 relate specifically to this part.The remaining fixed costs are unavoidable. Another manufacturer has offered to supply the part for $48 per unit.The facilities currently used to manufacture the part could be used to manufacture a new product with an expected contribution margin of $30,000.Alternately, the facilities could be rented out at $60,000.Given all of these alternatives, _____ is Deuce Company's lowest net cost per unit for the part.

• A)$30
• B)$48
• C)$42
• D)$44

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