1. Lucky\'s Long Board Park manufactures its own long boards to use at their nat
ID: 2350093 • Letter: 1
Question
1. Lucky's Long Board Park manufactures its own long boards to use at their national long board skiing park. An outside supplier has offered to sell long boards to Lucky's for $100 per unit. To evaluate this offer, Lucky's has gathered the following information relating to its own cost of producing a long board internally:Per Unit Total for 1,000 units
Direct materials $70 $70,000
Direct labor $22 $22,000
Variable manufacturing overhead $5 $5,000
Supervisors salaries $10 $10,000
Depreciation of machinery to make long boards $8 $8,000
Fixed manufacturing overhead, common, allocated $20 $20,000
Total cost $135 $135,000
Should the outside supplier's offer by accepted? Show all computations.
Explanation / Answer
They should definitely accept it since it costs them $135 to make one unit instead of $100. Hope this helped, best of luck.
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