Crigui Music produces 60000 CDs on which to record music.The CDs have the following costs: $$\begin{array} { l r }
\text { Direct Materials } & \$ 13,000 \
\text { Direct Labor } & 15,000 \
\text { Variable Overhead } & 3,000 \
\text { Fixed Overhead } & 7,000
\end{array}$$ Crigui could avoid $4000 in fixed overhead costs if it acquires the CDs externally.If cost minimization is the major consideration and the company would prefer to buy the 60000 units externally what is the maximum external price that Crigui would expect to pay for the units?

Question

Crigui Music produces 60000 CDs on which to record music.The CDs have the following costs: $$\begin{array} { l r } 
\text { Direct Materials } & \$ 13,000 \
\text { Direct Labor } & 15,000 \
\text { Variable Overhead } & 3,000 \
\text { Fixed Overhead } & 7,000
\end{array}$$ Crigui could avoid $4000 in fixed overhead costs if it acquires the CDs externally.If cost minimization is the major consideration and the company would prefer to buy the 60000 units externally what is the maximum external price that Crigui would expect to pay for the units?

Quizplus · Accepted Answer

The Answer of Crigui Music produces 60000 CDs on which to record music.The CDs have the following costs: $$\begin{array} { l r } 
\text { Direct Materials } & \$ 13,000 \
\text { Direct Labor } & 15,000 \
\text { Variable Overhead } & 3,000 \
\text { Fixed Overhead } & 7,000
\end{array}$$ Crigui could avoid $4000 in fixed overhead costs if it acquires the CDs externally.If cost minimization is the major consideration and the company would prefer to buy the 60000 units externally what is the maximum external price that Crigui would expect to pay for the units?

Crigui Music Produces 60000 CDs on Which to Record Music