Moyer Corporation is a specialty component manufacturer with idle capacity.Management would like to use its extra capacity to generate additional profits.A potential customer has offered to buy 2, 300 units of component TIB.Each unit of TIB requires 9 units of material F58 and 7 units of material D66.Data concerning these two materials follow: Material F58 is in use in many of the company's products and is routinely replenished.Material D66 is no longer used by the company in any of its normal products and existing stocks would not be replenished once they are used up. What would be the relevant cost of the materials, in total, for purposes of determining a minimum acceptable price for the order for product TIB?
A)$189, 290
B)$174, 215
C)$168, 533
D)$200, 905

Question

Moyer Corporation is a specialty component manufacturer with idle capacity.Management would like to use its extra capacity to generate additional profits.A potential customer has offered to buy 2, 300 units of component TIB.Each unit of TIB requires 9 units of material F58 and 7 units of material D66.Data concerning these two materials follow:  Material F58 is in use in many of the company's products and is routinely replenished.Material D66 is no longer used by the company in any of its normal products and existing stocks would not be replenished once they are used up. What would be the relevant cost of the materials, in total, for purposes of determining a minimum acceptable price for the order for product TIB?
A)$189, 290 
B)$174, 215 
C)$168, 533 
D)$200, 905

Quizplus · Accepted Answer

Materials requirements for F58: 2, 300 units of TIB × 9 units of F58 per unit of TIB = 20, 700 units of F58
Materials requirements for D66: 2, 300 units of TIB × 7 units of D66 per unit of TIB = 16, 100 units of D66
 11eaa0c8_952e_ff93_9cb2_1f507810205b_TB2487_00 * 16, 100 units - 15, 700 units = 400 units

Moyer Corporation Is a Specialty Component Manufacturer with Idle Capacity