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$80,000
machine setup
c.
quality control
d.
material ordering
e.
production scheduling
f.
warehouse expense
g.
engineering design
June
90,000
July
120,000
August
210,000
September
October
150,000
180,000
November
120,000
$180,000
$252,000
Workers wages
1,080,000
1,512,000
312,000
312,000
Supervisors salaries
Equipment depreciation
151,200
Maintenance
81,600
Utilities
Total
151,200
110,400
384,000
528,000
$2,188,800
$2,865,600
Using the high-low method and the information provided above, identify the
linear cost function equation.
3.00
1.20
1.60
Total
$6.40
Mike Company has offered to sell to Kirkland Company 10,000 units of the
part for $6.00 per unit. The plant facilities could be used to manufacture
another item at a savings of $9,000 if Kirkland accepts the offer. In addition,
$1.00 per unit of fixed manufacturing overhead on the original item would be
eliminated.
a.
What is the relevant per unit cost for the original part?
b.