Assume that if Sandhill Water accepts Clifton's offer, the company can use the freed-up manufacturing facilities to manufacture anew line of growing lights. The company estimates it can sell 93,050 of the new lights each year at a price of $ 13. Variable costs ofthe lights are expected to be $ 10 per unit. The timer unit supervisory and clerical staff would be transferred to this new productline. Calculate the total relevant cost to make the timer units and the net cost if they accept Clifton's offer.Total relevant cost to makeNet relevant cost if they accept Clifton's offer%24%24 Sandhill Water Co. is a leading producer of greenhouse irrigation systems. Currently, the company manufactures the timer unit used ineach of its systems. Based on an annual production of 44,500 timers, the company has calculated the following unit costs. Direct fixedcosts include supervisory and clerical salaries and equipment depreciation.Direct materials$ 12Direct labor7Variable manufacturing overhead3Direct fixed manufacturing overhead10 (30% salaries, 70% depreciation)Allocated fixed manufacturing overhead10Total unit cost$ 42Clifton Clocks has offered to provide the timer units to Sandhill at a price of $ 34 per unit. If Sandhill accepts the offer, the currenttimer unit supervisory and clerical staff will be laid off.

Assume that if Sandhill Water accepts Clifton's offer, the company can use the freed-up manufacturing facilities to manufacture a new line of growing lights. The company estimates it can sell 93,050 of the new lights each year at a price of $ 13. Variable costs of the lights are expected to be $ 10 per unit. The timer unit supervisory and clerical staff would be transferred to this new product line. Calculate the total relevant cost to make the timer units and the net cost if they accept Clifton's offer. Total relevant cost to make Net relevant cost if they accept Clifton's offer %24 %24

Assume that if Sandhill Water accepts Clifton's offer, the company can use the freed-up manufacturing facilities to manufacture a new line of growing lights. The company estimates it can sell 93,050 of the new lights each year at a price of $ 13. Variable costs of the lights are expected to be $ 10 per unit. The timer unit supervisory and clerical staff would be transferred to this new product line. Calculate the total relevant cost to make the timer units and the net cost if they accept Clifton's offer. Total relevant cost to make Net relevant cost if they accept Clifton's offer %24 %24

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 11E: Cashion Company produces chemical mixtures for veterinary pharmaceutical companies. Its factory has...

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