Averette & Averette
Averette & Averette, a local dental practice, currently makes its own dentures for customers. The dental practice has one part-time employee who comes in weekly to make dentures. The employee is paid $150 per denture set. The direct materials and variable overhead cost per set of dentures is $75 and $25, respectively. In addition, the practice allocates $10 000 of fixed overhead to the denture-making department. The practice makes 1000 sets of dentures per year. An outside company who specialises in the making of dentures has offered to make each set of dentures for Averette & Averette for $255 per set.

-What are Averette & Averette's total relevant costs to make the dentures themselves?

Question

Averette & Averette
Averette & Averette, a local dental practice, currently makes its own dentures for customers. The dental practice has one part-time employee who comes in weekly to make dentures. The employee is paid $150 per denture set. The direct materials and variable overhead cost per set of dentures is $75 and $25, respectively. In addition, the practice allocates $10 000 of fixed overhead to the denture-making department. The practice makes 1000 sets of dentures per year. An outside company who specialises in the making of dentures has offered to make each set of dentures for Averette & Averette for $255 per set.

-What are Averette & Averette's total relevant costs to make the dentures themselves?

Quizplus · Accepted Answer

The total relevant costs to make the dentures themselves include the part-time employee's pay per denture set ($150), direct materials ($75), and variable overhead ($25). Adding these together gives $150 + $75 + $25 = $250 per set. Fixed overhead is not considered a relevant cost because it does not change with the decision to make or buy the dentures.

Averette & Averette Averette & Averette, a Local Dental Practice, Currently Makes Its