U-RIDE, Inc. currently produces the electric engines that are used in golf carts made and sold by the Company. Electco has offered to sell the electric engines to U-RIDE at a price of $207 each. Current production information follows: Unit-level material and labor$180 Facility-level depreciation of manufacturing equip.$5,100/monthProduct-level engine production supervisor's salary$2,100/monthAnnual facility-level utilities$15,500 U-RIDE is currently operating profitably producing and selling 2,100 engines a year using 80% of its manufacturing capacity. Which of the following is true? Multiple Choice U-RIDE should make the engines for cost savings of $27 per unit. Buying the units would increase U-RIDE's cost by $15 per unit. U-RIDE has avoidable costs of greater than $207 per unit and should therefore buy the engines. Buying the units would increase profitability by $42 per unit.

Facility-level depreciation and Annual facility-level utilities would not be considered for…

Answered: U-RIDE, Inc. currently produces the…

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ISBN:9781947172609

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Chapter5: Process Costing

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U-RIDE, Inc. currently produces the electric engines that are used in golf carts made and sold by the Company. Electco has offered to sell the electric engines to U-RIDE at a price of $207 each.

Current production information follows:


Unit-level material and labor	$	180
Facility-level depreciation of manufacturing equip.	$	5,100	/month
Product-level engine production supervisor's salary	$	2,100	/month
Annual facility-level utilities	$	15,500

U-RIDE is currently operating profitably producing and selling 2,100 engines a year using 80% of its manufacturing capacity. Which of the following is true?

Multiple Choice

U-RIDE should make the engines for cost savings of $27 per unit.
Buying the units would increase U-RIDE's cost by $15 per unit.
U-RIDE has avoidable costs of greater than $207 per unit and should therefore buy the engines.
Buying the units would increase profitability by $42 per unit.

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