Rockford Company Manufactures a Part for Use in Its Production

question 70

Essay

Rockford Company manufactures a part for use in its production of hats.When 10,000 items are produced,the costs per unit are:

Angel Company has offered to sell to Rockford 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 Rockford 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 Rockford Company? By how much?

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Definitions:

Social-Cultural Perspective

An approach in psychology that emphasizes the importance of social interaction and the cultural context in understanding human behavior and mental processes.

Behavior And Thinking

The processes and actions that are influenced by the brain, environment, and society, embodying how individuals act and conceptualize their experiences.

Situations

Sets of conditions or circumstances that affect individuals and determine their possible actions at any given time.

Cultures

The social behavior, norms, knowledge, beliefs, arts, laws, customs, capabilities, and habits of the people in these societies.