Ortiz CoProduces 5,000 Units of Part A12E If Ortiz Buys the Part from an Outside Supplier, $40,000

question 47

Multiple Choice

Ortiz Co.produces 5,000 units of part A12E.The following costs were incurred for that level of production: $$\begin{array} { l r } \text { Direct materials } & \$ 55,000 \\\text { Direct labor } & 160,000 \\\text { Variable overhead } & 75,000 \\\text { Fixed overhead } & 175,000\end{array}$$ If Ortiz buys the part from an outside supplier, $40,000 of the fixed overhead is avoidable.
- What is the relevant cost per unit of part A12E?

• A)$58
• B)$85
• C)$93
• D)$66

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