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Every year Martinez Industries manufactures 5,300 units of part 231 for use in its production cycle. The per unit costs of part 231 are as follows: Direct materials $ 5 Direct labor 11 Variable manufacturing overhead 6 Fixed manufacturing overhead 10 Total $32 Flintrock, Inc., has offered to sell 5,300 units of part 231 to Martinez for $32 per unit. If Martinez accepts Flintrock's offer, its freed-up facilities could be used to earn $10,600 in contribution margin by manufacturing part 240. In addition, Martinez would eliminate 40% of the fixed overhead applied to part 231. (a) Calculate total relevant cost to make and net cost to buy.
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Every year Martinez Industries manufactures 5,300 units of part 231 for use in its production cycle....
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