#11 start trame.d2ltou 2208647ispv&drc-q-1; 129801co T-210-88 - Managerial Accou

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#11

start trame.d2ltou 2208647ispv&drc-q-1; 129801co T-210-88 - Managerial Accounting Dropbox Discussions Grades Quizzes Classlist Groups More v Ryan Maraff: Attempt 1 quesnon 11 (1U points) The Hayes Company manufactures and sells several products, one of which is called a slip differential. The company normally sells 30,000 units of the slip differential each month. At this activity level, unit costs are: $4. $3 Direct materials Direct labor Variable manufacturing overhead..S4 Fixed manufacturing overhead...$5 S3 $1 Picture An outside supplier has offered to produce the slip differentials for the Hayes Company, and to ship them directly to the Hayes Company's customers. This arrangement would permit the Hayes Company to reduce its variable selling expenses by one third (due to elimination of freight costs). The facilities now being used to produce the slip differentials would be idle and fixed manufacturing overhead would continue at 60 percent of its present level. The total fixed selling expenses of the company would be unaffected by this decision Required: What is the maximum acceptable price quotation for the slip differentials from the outside ALIENWARE

Explanation / Answer

Solution:-

Calculation of maximum acceptable price quotation:-

Maximum quotation = saving in cost

Please Rate or comment if you have any doubt regarding this solution.

Saving in cost (maximum quotation) (per unit) Direct material 4 Direct labor 3 Variable manufacturing overhead 4 Fixed manufacturing overhead (5 * 0.40) 2 Variable selling (1/3 of 3) 1 Fixed selling 0 Maximum acceptable price quotation 14.00

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