32) Rockford Company manufactures a part for use in its production of hats. When 10,000...
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Accounting
Rockford Company manufactures a part for use in its production of hats. When items are produced, the costs per unit are:
Direct materials $
Direct manufacturing labor
Variable manufacturing overhead
Fixed manufacturing overhead
Total $
Angel Company has offered to sell to Rockford Company units of the part for $ per unit. The plant facilities could be used to manufacture another item at a savings of $ if Rockford accepts the offer. In addition, $ per unit of fixed manufacturing overhead on the original item would be eliminated.
Required:
a What is the relevant per unit cost for the original part?
b Which alternative is best for Rockford Company? By how much?
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