(Not a repeat question.)Golden, Inc., has been manufacturing 5,000 units of Part 10541 which is...
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(Not a repeat question.)Golden, Inc., has been manufacturing 5,000 units of Part 10541 which is used in the manufacture of one of its products. At this level of production, the cost per unit of manufacturing Part 10541 is as follows:
| Direct Materials | $2 |
| Direct labor | 8 |
| Variable overhead | 4 |
| Fixed overhead applied | 6 |
| Total | $20 |
In deciding whether to make or buy the part, the total relevant costs to make the part are Brown Company has offered to sell Golden 5,000 units of Part 10541 for $19 a unit. Golden has determined that it could use the facilities presently used to manufacture Part 10541 to manufacture Product RAC and generate an operating profit of $4,000. Golden has also determined that two-thirds of the fixed overhead applied will continue even if Part 10541 is purchased from Brown. What is the relevant cost of continuing to make 5,000 units of Part 10541 internally?
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