Dixon Company manufactures part 347 for use in one of its main products. Normal annual production for part 347 is 100,000 units. The costs per 100 units is as follows Direct material . $260 Direct labor. . Manufacturing overhead: Variable .. 100 120 Fixed . 160 Total costs per 100 units.. $640 Cext Company has offered to sell Dixon all 100,000 units it will need during the coming year for $600 per 100units. If Dixon accepts the often from Cext, the facilities used to manufacture part 347 could be used in the production of part 483. This change would save Dixon $90,000 in relevant costs. Also, a $100,000 cost item included in the fixed factory overhead that is specifically related to part 347 would be eliminated. Required: Should Dixon Company accept the offer from Cext Company?

Dixon Company manufactures part 347 for use in one of its main products. Normal annual production for part 347 is 100,000 units. The costs per 100 units is as follows Direct material . $260 Direct labor. . Manufacturing overhead: Variable .. 100 120 Fixed . 160 Total costs per 100 units.. $640 Cext Company has offered to sell Dixon all 100,000 units it will need during the coming year for $600 per 100units. If Dixon accepts the often from Cext, the facilities used to manufacture part 347 could be used in the production of part 483. This change would save Dixon $90,000 in relevant costs. Also, a $100,000 cost item included in the fixed factory overhead that is specifically related to part 347 would be eliminated. Required: Should Dixon Company accept the offer from Cext Company?

Name: Dixon Company manufactures part 347 for use in one of its main produc
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Description: Dixon Company manufactures part 347 for use in one of its main products. Normal annual productionfor part 347 is 100,000 units. The costs per 100 units is as followsDirect material. . $260Direct labor. .Manufacturing overhead:Variable ..Fixed .Total

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 6PA: Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A...

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Gent Designs requires three units of part A for every unit of Al that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 4.000 units were produced: Variable manufacturing overhead is applied at $1.00 per unit. The other $0.30 of overhead consists of allocated fixed costs. Gent will need 6,000 units of part A for the next years production. Cory Corporation has offered to supply 6,000 units of part A at a price of $7.00 per unit. It Gent accepts the offer, all of the variable costs and $1,200 of the fixed costs will be avoided. Should Gent Designs accept the offer from Cory Corporation?
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