Question

The Bogart Company produces 5,200 units of item SLM 46 annually at a total cost of $208,000. Direct materials $ 20,800 Direct labor 57,200 Variable overhead 46,800 Fixed overhead 83,200 Total $ 208,000 The Conner Company has offered to supply all 5,200 units of SLM 46 per year for $35 per unit. If Bogart accepts the offer, $8 per unit of the fixed overhead would be saved. In addition, some of Bogart's leased facilities could be vacated, reducing lease payments by $31,200 per year. What are the relevant costs for the "make" alternative

Answer 1

Answer:

Check the explanation

Explanation:

The Relevant cost (which is a managerial accounting expression that illustrates the preventable expenditures that are incurred at the point when specific business decisions are being made. ) can be seen below:

Avoidable costs = 20,800+57,200+46,800 + (8x5200)+31,200

= 20,800+57,200+46,800 + 41600+31,200

= 197,600

= 197,600/5,000 units

= $39.52 or $40 approximately