Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows:

Crayola Technologies Inc. has contacted Rubium with an offer to sell 10,000 of the subassemblies for $138.00 each. Rubium will eliminate $89,000 of fixed overhead if it accepts the proposal. What are the relevant costs for Rubium?
A) $929,000
B) $1,029,000
C) $1,409,000
D) $1,739,000

Question

Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows:

Crayola Technologies Inc. has contacted Rubium with an offer to sell 10,000 of the subassemblies for $138.00 each. Rubium will eliminate $89,000 of fixed overhead if it accepts the proposal. What are the relevant costs for Rubium?
A) $929,000 
B) $1,029,000 
C) $1,409,000 
D) $1,739,000

Quizplus · Accepted Answer

The relevant costs for Rubium = [($51.00 + $43.00 + $38.00) × 10,000 + $89,000] = $1,409,000

Rubium Micro Devices Currently Manufactures a Subassembly for Its Main