Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. case #3 lofy co. manufactures 48,000 units of a co

Case #3 Lofy Co. manufactures 48,000 units of a component each year that Lofy Co....

50.1K

Verified Solution

Question

Accounting

image

Case #3 Lofy Co. manufactures 48,000 units of a component each year that Lofy Co. uses in the production of one of its product lines. Relevant manufacturing costs for those units are as follows: Direct materials Direct labour Variable overhead Fixed overhead Total costs $90,000 $144,000 $54,000 $72,000 $360,000 Recently, management at Lofy Co. has received an offer from a potential supplier that is willing to sell the components to Lofy Co. for $15.30 per unit. If Lofy Co. accepts the offer, management could rent its unused manufacturing facilities for $54,000. Required: (A) Should Lofy Co. accept the potential supplier's offer? How much would Lofy Co.'s income increase or decrease by accepting the order? (B) What qualitative factors should companies, such as Lofy Co., consider prior to accepting/declining this type of offer from a potential supplier

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students