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WINSTONCH
18 days ago
15

Hudson Co. is currently producing 1,000 units of a necessary component part by incurring $54,400 in direct materials, $24,000 in

direct labor, $14,400 in variable overhead, and $16,000 in fixed overhead. Hudson could avoid $9,600 of fixed overhead if the component is purchased externally. Hudson wishes to minimize costs and would prefer to purchase the component. What is the maximum external price that Hudson should pay to acquire 1,000 units of the component? A : $99,200 B : $94,400 C : $102,400 D : $92,800
Business
1 answer:
stepan [3K]18 days ago
4 0

Answer:

The answer is C.

Explanation:

According to the provided details:

Hudson Co. is manufacturing 1,000 units of a vital component at the cost of $54,400 for direct materials, $24,000 for direct labor, $14,400 for variable overhead, and $16,000 for fixed overhead. If they opt to buy the component instead, Hudson could eliminate $9,600 of fixed overhead expenses. The company aims to reduce expenses and prefers to obtain the component externally.

Make in house:

Variable cost per unit = (54,400 + 24,000 + 14,400)/1000= 92.8

Total expenses = 92.8*1000 + 9600= $102,400

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