Harrison Enterprises currently produces 8,000 units of part B13. Current unit costs for part B13 are...

Harrison Enterprises currently produces 8,000 units of part B13. Current unit costs for part B13 are as follows: Direct materials $12 Direct labor 9 Factory rent 7 Administrative costs 10 General factory overhead (allocated) 7 Total $45 If Harrison decides to buy part B13, 50% of the administrative costs would be avoided. All of the company’s items, including part B13, are manufactured in the same rented production facility. The company has an offer from a wholesaler that wishes to sell the part to Harrison for $31 per unit. What will occur if the company accepts the offer?

The cost for this part will decrease by $14 per unit.

The cost for this part will be the same.

The cost for this part will decrease by $10 per unit.

The cost for this part will increase by $5 per unit.

Expert Solution

ekkarill92 answered 2 years ago

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