# Every year Blue Industries manufactures 7,300 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: Direct materials   $3 Direct labor 11 Variable manufacturing overhead 8 Fixed manufacturing overhead 10 Total$32   Flintrock, Inc., has offered to sell 7,300 units of part 231 to Blue for $33 per unit. If Blue accepts Flintrock’s offer, its freed-up facilities could be used to earn$10,700 in contribution margin by manufacturing part 240. In addition, Blue would eliminate 50% 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 $Net relevant cost to buy$   (b) Should Blue accept Flintrock’s offer?  YesNo     Click if you would like to Show Work for this question: Open Show Work

Question
Every year Blue Industries manufactures 7,300 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows:

 Direct materials $3 Direct labor 11 Variable manufacturing overhead 8 Fixed manufacturing overhead 10 Total$32

Flintrock, Inc., has offered to sell 7,300 units of part 231 to Blue for $33 per unit. If Blue accepts Flintrock’s offer, its freed-up facilities could be used to earn$10,700 in contribution margin by manufacturing part 240. In addition, Blue would eliminate 50% 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 $Net relevant cost to buy$

(b) Should Blue accept Flintrock’s offer?

YesNo

 Click if you would like to Show Work for this question: Open Show Work