Answer the Following Question(s)using the Information Below

question 85

Multiple Choice

Answer the following question(s) using the information below.Schmidt Corporation produces a part that is used in the manufacture of one of its products.The costs associated with the production of 10,000 units of this part are as follows:
Of the fixed factory overhead costs, $30,000 is avoidable.
-Assuming accepting the offer creates excess facility capacity that can be used to produce 2,000 units of another product that has a unit selling price of $24, variable costs of $12, and fixed cost allocation of $3.What is the highest price that Schmidt should be willing to pay Phil Company for 10,000 units of the part?

• A)$146,000
• B)$164,000
• C)$152,000
• D)$134,000
• E)$140,000

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Definitions:

Lease of Goods

A contractual agreement in which one party, the lessor, grants the other party, the lessee, the right to use an asset, such as equipment or vehicles, for a specified period in exchange for payment.

Statute of Frauds

A legal concept that requires certain contracts to be in writing and signed by all parties involved to be enforceable.

Oral Contract

An agreement between parties that is not written but is fully valid and enforceable if it meets certain legal criteria.

Interest in Land

Interest in land refers to legal rights over property, including ownership, use, or other financial benefits associated with real estate.