Lang Manufacturing Company manufactures a part for use in its production of recreation vehicles.When 10,000 items are produced, the costs per unit are:
Gehen Company has offered to sell Lang Manufacturing Company 10,000 units of the part for $130 per unit.The plant facilities could be used to manufacture another part at a savings of $150,000 if Lang Manufacturing accepts the supplier's offer.In addition, $10 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 Lang Manufacturing Company? By how much?

Question

Lang Manufacturing Company manufactures a part for use in its production of recreation vehicles.When 10,000 items are produced, the costs per unit are:
  Gehen Company has offered to sell Lang Manufacturing Company 10,000 units of the part for $130 per unit.The plant facilities could be used to manufacture another part at a savings of $150,000 if Lang Manufacturing accepts the supplier's offer.In addition, $10 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 Lang Manufacturing Company? By how much?

Quizplus · Accepted Answer

The Answer of Lang Manufacturing Company manufactures a part for use in its production of recreation vehicles.When 10,000 items are produced, the costs per unit are:
  Gehen Company has offered to sell Lang Manufacturing Company 10,000 units of the part for $130 per unit.The plant facilities could be used to manufacture another part at a savings of $150,000 if Lang Manufacturing accepts the supplier's offer.In addition, $10 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 Lang Manufacturing Company? By how much?

Lang Manufacturing Company Manufactures a Part for Use in Its