Sunland Water Co. is a leading producer of greenhouse irrigation systems. Currently, the company manufactures...
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Accounting
Sunland Water Co. is a leading producer of greenhouse irrigation systems. Currently, the company manufactures the timer unit used in each of its systems. Based on an annual production of 43,500 timers, the company has calculated the following unit costs. Direct fixed costs include supervisory and clerical salaries and equipment depreciation.
Direct materials
$11
Direct labor
6
Variable manufacturing overhead
3
Direct fixed manufacturing overhead
8
(30% salaries, 70% depreciation)
Allocated fixed manufacturing overhead
9
Total unit cost
$37
Clifton Clocks has offered to provide the timer units to Sunland at a price of $34 per unit. If Sunland accepts the offer, the current timer unit supervisory and clerical staff will be laid off.
(a1)
Calculate the total relevant cost to make or buy the timer units. (Round answers to 0 decimal places, e.g. 5,250.)
Make
Buy
Total relevant cost
$enter a dollar amount rounded to 0 decimal places
$enter a dollar amount rounded to 0 decimal places
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