The Reno Company manufactures Part No. 498 for use in its production line. The manufacturing cost… Assignment Help

  

The Reno Company manufactures Part No. 498 for use in itsproduction line. The manufacturing costs per unit for 20,000 unitsof Part No. 498 are as follows:Direct materials$6Direct manufacturing labor30Variable manufacturing overhead12Fixed manufacturing overhead allocated16Total manufacturing cost per unit$64The Tray Company has offered to sell 20,000 units of Part No.498 to Reno for $60 per unit. Reno will make the decision to buythe part from Tray if there is an overall savings of at least$12,000 for Reno. If Reno accepts Tray’s offer, $9 per unit of thefixed overhead allocated would be totally eliminated. Furthermore,Reno has determined that the released facilities could be used tosave relevant costs in the manufacture of Part No. 575. For Reno toachieve an overall savings of $12,000, the amount of relevant coststhat would have to be saved by using the released facilities in themanufacture of Part No. 575 would be:Question 15 options:A)$80,000B)$85,000C)$12,000D)$72,000

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