Holt Pty Ltd Presently Makes 20 000 Units of a Certain

question 5

Multiple Choice

Holt Pty Ltd presently makes 20 000 units of a certain part to use in production. The cost to make the part is $20 per unit including $15 in variable costs and $5 in fixed overhead applied. If Holt buys the part from Bricker, the cost would be $18 per unit and the released facilities could not be used for any other activity. Eighty per cent of the fixed overhead would continue. Determine the relevant costs to make the part.

• A) $320 000
• B) $360 000
• C) $380 000
• D) $300 000

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