Anderson Co If Anderson Accepts the Order,$8 of Fixed Overhead Per Unit

question 78

Multiple Choice

Anderson Co.makes and uses 5,000 components each year in its manufacturing operations.An outside supplier has offered to supply the components to Anderson at $66 per unit.Anderson's production costs are as follows: $\begin{array}{ll}\text { Direct materials } & \$ 8 \\\text { Direct labor } & 32 \\\text { Variable overhead } & 12 \\\text { Fixed overhead (based on normal capacity) } & 34\end{array}$ If Anderson accepts the order,$8 of fixed overhead per unit will be eliminated.
What is the relevant cost to produce one unit?

• A) $86
• B) $52
• C) $78
• D) $60

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Definitions:

Annual Growth Rate

The annual growth rate measures the percentage increase in the value of a particular variable (such as revenue, profit, or investment) over a one-year period, indicating the pace of growth.

Eating Establishments

Refers to businesses that serve food and beverages for consumption by customers on-premises or through take-away and delivery services.

Population

The total number of individuals or entities within a specified area or group.

Compounded Annually

The method of gaining interest on the original principal as well as on the interest accrued from prior periods, computed annually.