Lewis S.Gray Inc.manufactures a part for use in its production of art deco furniture.When 10,000 items are produced,the costs per unit are:
Colonial Accents Company has offered to sell to Lewis S.Gray 10,000 units of the part for $125 per unit.The plant facilities could be used to manufacture another part at a savings of $180,000 if Lewis S.Gray accepts the supplier's offer.In addition,$30 per unit of fixed manufacturing overhead on the original part would be eliminated.
Required:
a.What is the relevant per unit cost for the original part?
b.Which alternative is best for Lewis S.Gray Company? By how much?
Definitions:
Residential Care
A type of living arrangement where individuals receive accommodation and personal care services, typically for the elderly or disabled.
Tactile Hallucinations
Sensory perceptions of touch or movement on the body with no physical cause, often associated with certain mental health conditions.
Mnemonic Disturbance
A disruption in the ability to remember or recall information, often due to brain dysfunction or psychological stress.
Agnosia
A neurological disorder characterized by the inability to recognize and interpret sensory information, despite having functioning senses.
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