Kirkland Company Manufactures a Part for Use in Its Production

question 1

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:

Frankfurt School

A group of mid-20th century theorists who developed critical theories about society, culture, and economy in a capitalist system.

Culture

The sum of attitudes, customs, and beliefs that distinguishes one group of people from another, transmitted from generation to generation.

Social Reality

The construct of society as experienced and understood by individuals within that society.

Culture

encompasses the shared beliefs, customs, arts, institutions, and all other products of human work and thought characteristic of a community or population.