Lang Manufacturing Company manufactures a part for use in its production of recreation vehicles.When 10,000 items are produced, the costs per unit are:
Gehen Company has offered to sell Lang Manufacturing Company 10,000 units of the part for $130 per unit.The plant facilities could be used to manufacture another part at a savings of $150,000 if Lang Manufacturing accepts the supplier's offer.In addition, $10 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 Lang Manufacturing Company? By how much?
Definitions:
Parental Leave
The period of time that a parent is allowed away from work to care for a newborn or newly adopted child, often while retaining one's job and sometimes receiving pay or benefits.
Industrialized Countries
Nations characterized by a robust industrial sector, advanced technological infrastructure, and higher levels of income and quality of life compared to less industrialized nations.
Unpaid Leave
A period of time that a worker is allowed to be away from their job without receiving salary or wages.
Parental Leave
The period of time granted to a parent to take off from work following the birth or adoption of a child.
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