The CJP Company produces 10,000 units of item S10 annually at a total cost of $190,000. The XYZ Company has offered to supply 10,000 units of S10 per year for $18 per unit.If CJP accepts the offer,$4 per unit of the fixed overhead would be saved.In addition,some of CJP's facilities could be rented to a third party for $15,000 per year.What are the relevant costs for the "make" alternative?
A)$160,000.
B)$165,000.
C)$175,000.
D)$185,000.

Question

The CJP Company produces 10,000 units of item S10 annually at a total cost of $190,000.  The XYZ Company has offered to supply 10,000 units of S10 per year for $18 per unit.If CJP accepts the offer,$4 per unit of the fixed overhead would be saved.In addition,some of CJP's facilities could be rented to a third party for $15,000 per year.What are the relevant costs for the "make" alternative?
A)$160,000. 
B)$165,000. 
C)$175,000. 
D)$185,000.

Quizplus · Accepted Answer

The Answer of The CJP Company produces 10,000 units of item S10 annually at a total cost of $190,000.  The XYZ Company has offered to supply 10,000 units of S10 per year for $18 per unit.If CJP accepts the offer,$4 per unit of the fixed overhead would be saved.In addition,some of CJP's facilities could be rented to a third party for $15,000 per year.What are the relevant costs for the "make" alternative?
A)$160,000. 
B)$165,000. 
C)$175,000. 
D)$185,000.

The CJP Company Produces 10,000 Units of Item S10 Annually