Transformation Motor Company Produces a Part That Is Used in the Manufacture

question 1

Short Answer

Transformation Motor Company produces a part that is used in the manufacture of one of its products.The unit manufacturing costs of this part,assuming a production level of 6,000 units,are as follows:
$\begin{array}{ll}\text { Direct materials } & \$ 5 \\\text { Direct labor (variable cost) } & 6 \\\text { Variable manufacturing overhead } & 3 \\\text { Fixed manufacturing overhead } & \underline{4} \\\text { Total cost } & \underline{\$ 18}\end{array}$ Alba Motors Company has offered to sell 6,000 units of the same part to Transformation for $17.50 per unit.Assuming the company has no other use for its facilities and that the fixed manufacturing costs are unavoidable,what should Transformation do?

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Definitions:

Organizational Context

The set of circumstances or conditions, including culture and structure, that surrounds and influences the operations of an organization.

Exert Influence

The act of impacting or changing someone's behavior, actions, or perception through direct or indirect means.

Goal Achievement

The successful attainment of specific aims or objectives.

Scientific Research

The organized examination and analysis of data and sources to determine truths and achieve fresh insights.