Anderson Co.makes and uses 5,000 components each year in its manufacturing operations.An outside supplier has offered to supply the components to Anderson at $66 per unit.Anderson's production costs are as follows: $\begin{array}{ll}
\text { Direct materials } & \$ 8 \
\text { Direct labor } & 32 \
\text { Variable overhead } & 12 \
\text { Fixed overhead (based on normal capacity) } & 34
\end{array}$
If Anderson accepts the order,$8 of fixed overhead per unit will be eliminated.
What is the relevant cost to produce one unit?

Question

Anderson Co.makes and uses 5,000 components each year in its manufacturing operations.An outside supplier has offered to supply the components to Anderson at $66 per unit.Anderson's production costs are as follows: $\begin{array}{ll}
\text { Direct materials } & \$ 8 \
\text { Direct labor } & 32 \
\text { Variable overhead } & 12 \
\text { Fixed overhead (based on normal capacity) } & 34
\end{array}$
 If Anderson accepts the order,$8 of fixed overhead per unit will be eliminated.
What is the relevant cost to produce one unit?

Quizplus · Accepted Answer

The Answer of Anderson Co.makes and uses 5,000 components each year in its manufacturing operations.An outside supplier has offered to supply the components to Anderson at $66 per unit.Anderson's production costs are as follows: $\begin{array}{ll}
\text { Direct materials } & \$ 8 \
\text { Direct labor } & 32 \
\text { Variable overhead } & 12 \
\text { Fixed overhead (based on normal capacity) } & 34
\end{array}$
 If Anderson accepts the order,$8 of fixed overhead per unit will be eliminated.
What is the relevant cost to produce one unit?

Anderson Co If Anderson Accepts the Order,$8 of Fixed Overhead Per Unit