Question - RSW Company manufactures 15,000 units of wheel sets for use in its annual production. Costs are as follows:
|
Item
|
Cost
|
|
Direct materials
|
$42,000
|
|
Direct labor
|
63,000
|
|
Variable manufacturing overhead
|
58,000
|
|
Fixed manufacturing overhead
|
76,000
|
Rayco Company has offered to sell RSW 15,000 units of wheel sets for $14 per unit. If RSW accepts the offer, some of the facilities presently used to manufacture wheel sets could be rented to a third party at an annual rental of $25,500. In addition, $43,000 of fixed overhead would be totally eliminated.
Requirements: Prepare an incremental analysis schedule to demonstrate if RSW should accept Rayco's offer.