Every year Cheyenne Industries manufactures 8,000 units of part 231 for use in its production...
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Accounting
Every year Cheyenne Industries manufactures 8,000 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total MON 7 10 $29 Flintrock, Inc., has offered to sell 8,000 units of part 231 to Cheyenne for $32 per unit. If Cheyenne accepts Flintrock's offer, its freed-up facilities could be used to earn $13,700 in contribution margin by manufacturing part 240. In addition, Cheyenne would eliminate 40% of the fixed overhead applied to part 231. (a) Calculate total relevant cost to make and net cost to buy. Total relevant cost to make A Net relevant cost to buy - (b) Should Cheyenne accept Flintrock's offer
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