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?
Definitions:
DSM-5
The fifth edition of the Diagnostic and Statistical Manual of Mental Disorders, a guide used by healthcare professionals to diagnose mental disorders.
Deceitfulness Or Theft
Engaging in intentional dishonesty or the unlawful taking of another's property without permission or consent.
Oppositional Defiant Disorder
A behavioral disorder in children marked by defiant, disobedient, and hostile behavior towards authority figures.
Argumentative/defiant Behavior
Actions characterized by persistent arguments, defiance against authority figures, and refusal to follow rules, often observed in conduct disorders.
Q4: Which of the following is true of
Q13: Max and Marv are starting a new
Q35: A major reason for choosing _ utilization
Q71: All variable costs are relevant in relevant-cost
Q74: What is the Satellite Inc. life cycle
Q77: For cost estimation purposes data must be
Q91: If a dual-rate cost-allocation method is used,
Q112: The distinction between variable costs and fixed
Q116: What is the change in operating profits
Q130: Generally Accepted Accounting Principles require that _