Assuming no other use of their facilities, the highest price that Schmidt should be willing to pay for 10,000 units of the part is

ACCOUNTING

Multiple Choice

Schmidt Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows:



Direct materials $ 45,000

Direct labor 65,000

Variable factory overhead 30,000

Fixed factory overhead 70,000

Total costs $210,000



Of the fixed factory overhead costs, $30,000 is avoidable.



Assuming no other use of their facilities, the highest price that Schmidt should be willing to pay for 10,000 units of the part is

a. $210,000.

b. $140,000.

c. $170,000.

d. $180,000.


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