Kirkland Company Manufactures a Part for Use in Its Production

question 67

Essay

Kirkland Company manufactures a part for use in its production of hats.When 10,000 items are produced, the costs per unit are:
Mike Company has offered to sell to Kirkland Company 10,000 units of the part for $6.00 per unit.The plant facilities could be used to manufacture another item at a savings of $9,000 if Kirkland accepts the offer.In addition, $1.00 per unit of fixed manufacturing overhead on the original item would be eliminated.Required:
a.What is the relevant per unit cost for the original part?
b.Which alternative is best for Kirkland Company? By how much?

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Definitions:

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Personality characteristics that are influenced by genetic factors and can be passed from parents to offspring.

Male-Female Genetic Differences

Genetic disparities between males and females, typically referring to differences found within the XX and XY chromosomes affecting physical, developmental, and behavioral traits.

Environmental Factors

External elements such as climate, pollutants, and social contexts that can influence an organism's development and behavior.

Sex Hormones

Hormones such as estrogen, progesterone, and testosterone that are involved in the regulation of sexual and reproductive functions, and that influence secondary sex characteristics.