(Solved):Part A42 is used by Elgin Corporation to make one of its products. A total of 18,500 units of…

 

Question

Part A42 is used by Elgin Corporation to make one of its products. A total of 18,500 units of this part are produced and used every year. The company’s Accounting Department reports the following costs of producing the part at this level of activity:

Per Unit

Direct materials $8.00

Direct labor $9.40

Variable manufacturing overhead $6.00

Supervisor’s salary $6.10

Depreciation of special equipment $8.50

Allocated general overhead $5.80

An outside supplier has offered to make the part and

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