Question

Striker 44 Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of​ 12,000 units of this part are as​ follows: Direct materials ​$86,000 Direct labor ​130,000 Variable factory overhead ​57,000 Fixed factory overhead ​135,000 Total costs ​$408,000 Of the fixed factory overhead​ costs, $58,000 is avoidable. Assuming no other use of their​ facilities, the highest price that McMurphy should be willing to pay for​ 12,000 units of the part is​ ________. A. ​$331,000 B. ​$273,000 C. ​$351,000 D. ​$408,000

Answer 1

Answer:

correct option is A. ​$331,000

Explanation:

given data

Direct materials =  ​$86,000

Direct labor ​= 130,000

Variable factory overhead = ​57,000

Fixed factory overhead ​= 135,000

Total costs = ​$408,000

avoidable =  $58,000

to find out

highest price that McMurphy should be willing to pay for​ 12,000 units of the part is

solution

we get here highest price that McMurphy should be willing to pay for​ 12,000 units of the part that is express as

highest price  = Direct material + Direct Labor + variable factory overhead + avoidable fixed overhead   .....................1

put here value we get

highest price  = $86000 + $130000 + $57000 + $58000

highest price  = $331,000

so correct option is A. ​$331,000