Lewis S Gray Inc

question 157

Essay

Lewis S. Gray Inc. manufactures a part for use in its production of art deco furniture. When 10,000 items are produced, the costs per unit are:

Colonial Accents Company has offered to sell to Lewis S. Gray 10,000 units of the part for $125 per unit. The plant facilities could be used to manufacture another part at a savings of $180,000 if Lewis S. Gray accepts the supplier's offer. In addition, $30 per unit of fixed manufacturing overhead on the original part would be eliminated.
Required:
a.What is the relevant per unit cost for the original part?
b.Which alternative is best for Lewis S. Gray Company? By how much?

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Definitions:

Employee Skills

The abilities and expertise that employees possess, which enable them to perform their job functions effectively and contribute to achieving organizational goals.

Knowledge Pool

The collective expertise, information, and skills available within an organization or community.

Employee Engagement

The emotional commitment an employee has to their organization and its goals, leading to higher levels of job performance.

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The advancement or professional development of an individual within their chosen career path, often involving promotions or learning new skills.