Question

QUESTIONS 13 AND 14 ARE BASED ON THE FOLLOWING DATA. Piels Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows: Direct materials $ 90,000 Direct labor 130,000 Variable factory overhead 60,000 Fixed factory overhead 140,000 Total costs $420,000 Of the fixed factory overhead costs, $60,000 is avoidable. 13. Conners Company has offered to sell 10,000 units of the same part to Piels Corporation for $36 per unit. Assuming there is no other use for the facilities, Piels should: A) make the part, as this would save $6 per unit B) buy the part, as this would save $6 per unit C) buy the part, as this would save the company $60,000 D) make the part, as this would save $2 per unit 14. Assuming no other use of their facilities, the highest price that Piels should be willing to pay for 10,000 units of the part is: A) $420,000 B) $280,000 C) $340,000 D) $360,000

Answer 1