Maurice Tutor

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    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 24 Aug 2017 My Price 7.00

EZ Stor, Inc.

EZ Stor, Inc., produces hard disk drives of various sizes for use in computer and electronic equipment. Costs for one product, EZ-5, follow for the normal volume of 5,000 per month.

Unit manufacturing costs

  

Variable materials

$30

  

Variable labor

5

  

Variable overhead

5

  

Fixed overhead

50

  

Total unit manufacturing costs

  

$ 90

Unit nonmanufacturing costs

    

Variable

$10

  

Fixed

20

  

Total unit nonmanufacturing costs

  

30

Total unit costs

  

$120

A proposal is received from an outside supplier who will test, produce, and ship 1,000 units per month directly to EZ Stor’s customers as orders are received from EZ’s sales force. EZ Stor’s fixed and variable nonmanufacturing costs would be unaffected, but its variable manufacturing costs would be cut by 20 percent per unit for those 1,000 units shipped by the contractor. EZ Stor’s plant would operate at 80 percent of its normal level, and total fixed manufacturing costs per month would be cut by 10 percent. Should the proposal be accepted for a payment to the contractor of $38 per unit? (Revenue information is not needed to answer this question.)

Answers

Maurice Tutor
(5)
Status NEW Posted 24 Aug 2017 03:08 PM My Price 7.00

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