Cooper CoMakes and Uses 5,000 Components Each Year in Its Manufacturing

question 68

Multiple Choice

Cooper 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: If Cooper accepts the order,$8 of fixed overhead per unit will be eliminated.
-What is the relevant cost to produce one unit?

• A)$52
• B)$60
• C)$78
• D)$86

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Definitions:

Goods

Physical items that are produced or purchased for sale by a business.

Deferred Expenses

Costs that have been incurred but not yet expensed in the income statement because they will benefit more than one accounting period.

Initial Cash Flow

The initial movement of money for an investment or project, often an outlay, which is considered when evaluating the potential financial returns.