Knowledge Check 01 Tyler Industries currently manufactures one of its crucial parts at a cost...
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Knowledge Check 01 Tyler Industries currently manufactures one of its crucial parts at a cost of $4.50 per unit. This cost is based on a normal production rate of 50,000 units per year. Direct materials costs are $1.50 per unit and direct laboris $1.00 per unit, incremental overhead costs related to making this part are $50,000 per year, and allocated fixed overhead costs are $50,000 per year. Allocated fixed costs are unavoidable whether the company makes or buys the part. Tyler is considering buying the part from a supplier for a quoted price of $3.70 per unit guaranteed for a three-year period. What is the relevant cost of making the 50,000 units? $125,000 $185.000 $175.000 $225,000
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