Lang Manufacturing Company Manufactures a Part for Use in Its

question 138

Essay

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?

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Definitions:

Environmental Costs

Environmental costs are expenses associated with the impact of an activity on the environment, including pollution mitigation, resource depletion, and habitat destruction.

Consumer Product Safety Act

A federal law that aims to protect consumers from products that pose fire, chemical, mechanical, or electrical hazards, promoting the safety of consumer products.

Product Liability

The legal responsibility of manufacturers and sellers to ensure that their products are safe and free from defects, and to compensate for any damages caused by their products.

Contaminated Products

Items that have been tainted with substances that are harmful or undesired, affecting the product's safety and quality.