Patterson Manufacturing Company manufactures
Patterson Manufacturing Company manufactures part #52749 for use in its production cycle. The costs per unit for 10,000 units of part #52749 are as follows: Direct materials $3 Direct labor $15 Variable overhead $6 Fixed overhead $8 Blundell Company has offered to sell Patterson 10,000 units of part #52749 for $30 per unit. If Patterson accepts Blundell’s offer, the released facilities could be used to save $45,000 in relevant costs in the manufacture of part #60657. In addition, $5 per unit of the fixed overhead applied to part #52749 would be totally eliminated. Required: What are the total relevant costs to manufacture part #52749? What are the total relevant costs to buy part #52749? What alternative is more desirable and by…
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