Green Manufacturing makes 30,000 units per year of a part used in the manufacture of its new camcorder. An outside supplier has offered to sell Green the part for $48 a unit. If the part was purchased from the supplier, all of the direct labor costs would be avoided as well as $5 of the manufacturing overhead cost per unit. Product cost information for the part under review is as follows:
$\begin{array}{lr}
\text { Direct Materials}&\$18\
\text { Direct Labor}&\$24\
\text { Manufacturing overhead}&\$16\
\text { Unit product cost}&\$58\
\end{array}$

How much of the unit product cost is relevant in the decision of whether to make or buy the part?
A)$58.
B)$42.
C)$47.
D)$40.

Question

Green Manufacturing makes 30,000 units per year of a part used in the manufacture of its new camcorder. An outside supplier has offered to sell Green the part for $48 a unit. If the part was purchased from the supplier, all of the direct labor costs would be avoided as well as $5 of the manufacturing overhead cost per unit. Product cost information for the part under review is as follows:
$\begin{array}{lr}
\text { Direct Materials}&\$18\
\text { Direct Labor}&\$24\
\text { Manufacturing overhead}&\$16\
\text { Unit product cost}&\$58\
\end{array}$

How much of the unit product cost is relevant in the decision of whether to make or buy the part?
A)$58.
B)$42.
C)$47.
D)$40.

Quizplus · Accepted Answer

The Answer of Green Manufacturing makes 30,000 units per year of a part used in the manufacture of its new camcorder. An outside supplier has offered to sell Green the part for $48 a unit. If the part was purchased from the supplier, all of the direct labor costs would be avoided as well as $5 of the manufacturing overhead cost per unit. Product cost information for the part under review is as follows:
$\begin{array}{lr}
\text { Direct Materials}&\$18\
\text { Direct Labor}&\$24\
\text { Manufacturing overhead}&\$16\
\text { Unit product cost}&\$58\
\end{array}$

How much of the unit product cost is relevant in the decision of whether to make or buy the part?
A)$58.
B)$42.
C)$47.
D)$40.

Green Manufacturing Makes 30,000 Units Per Year of a Part