howard manufactures machine parts for aircraft engines. The CEO was considering

Question

howard manufactures machine parts for aircraft engines. The CEO was considering an offer from a subcontractor that would provide 2,400 units of product PQ107 for howard for 150,000 If Howard doesn't purses these parts from the subcontractor it must produce them in house with the following direct material 31 direct labor 19 variable overhead 8 in addition if howard producers the part it would have a retooling and design of 9,800 the relevant costs of producing 2,400 units of the product are a. 149,00 b 129,800 c. 150,000 d 164,200 e 148,300

Explanation / Answer

Cost of producing 2400 unit :

so answer is a) $149000

Direct material (2400*31) 74400 Direct labour (2400*19) 45600 Variable overhead (2400*8) 19200 Retooling and design 9800 Total relevant cost 149000

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