Kingston Company,which needs 10,000 units of a certain part to be used in its production cycle,can make or buy the part.If Kingston buys the part from Utica Company,Kingston could not use the released facilities in another manufacturing activity within the coming year.60% of the fixed overhead applied will continue regardless of which decision is made.The following information is available: Cost to Kingston to make the part:
In deciding whether to make or buy the part,Kingston's total relevant costs to make the part are:
A)$342,000.
B)$480,000.
C)$530,000.
D)$570,000. 10,000 x [$6 + 24 + 12 + (0.4x15)] = $480,000

Question

Kingston Company,which needs 10,000 units of a certain part to be used in its production cycle,can make or buy the part.If Kingston buys the part from Utica Company,Kingston could not use the released facilities in another manufacturing activity within the coming year.60% of the fixed overhead applied will continue regardless of which decision is made.The following information is available: Cost to Kingston to make the part: 
In deciding whether to make or buy the part,Kingston's total relevant costs to make the part are:
A)$342,000. 
B)$480,000. 
C)$530,000. 
D)$570,000. 10,000 x [$6 + 24 + 12 + (0.4x15)] = $480,000

Quizplus · Accepted Answer

The Answer of Kingston Company,which needs 10,000 units of a certain part to be used in its production cycle,can make or buy the part.If Kingston buys the part from Utica Company,Kingston could not use the released facilities in another manufacturing activity within the coming year.60% of the fixed overhead applied will continue regardless of which decision is made.The following information is available: Cost to Kingston to make the part: 
In deciding whether to make or buy the part,Kingston's total relevant costs to make the part are:
A)$342,000. 
B)$480,000. 
C)$530,000. 
D)$570,000. 10,000 x [$6 + 24 + 12 + (0.4x15)] = $480,000

Kingston Company,which Needs 10,000 Units of a Certain Part to Be