Moon Appliance manufactures a variety of appliances which all use Part B89.Currently,Moon Appliance manufactures Part B89 itself.It has been producing 9,000 units of Part B89 annually.The annual costs of producing Part B89 at the level of 9,000 units include:

All of the fixed manufacturing overhead costs would continue whether Part B89 is made internally or purchased from an outside supplier.Moon Appliance has no alternative use for its manufacturing facilities.Nadal Parts Company has offered to sell 9,000 units of Part B89 to Moon Appliance for $20.00 per unit.What is the highest price per unit that Moon Appliance should be willing to pay for the part?

Question

Moon Appliance manufactures a variety of appliances which all use Part B89.Currently,Moon Appliance manufactures Part B89 itself.It has been producing 9,000 units of Part B89 annually.The annual costs of producing Part B89 at the level of 9,000 units include:

All of the fixed manufacturing overhead costs would continue whether Part B89 is made internally or purchased from an outside supplier.Moon Appliance has no alternative use for its manufacturing facilities.Nadal Parts Company has offered to sell 9,000 units of Part B89 to Moon Appliance for $20.00 per unit.What is the highest price per unit that Moon Appliance should be willing to pay for the part?

Quizplus · Accepted Answer

B)
Direct Materials $3.00
Direct Labor 8.00
Variable MOH 4.00
Total Variable Cost $15.00

Moon Appliance Manufactures a Variety of Appliances Which All Use