54.

Emerald Corporation has been manufacturing 5,000 units of Part 10541, which is
used in the manufacture of one of its products. At this level of production, the cost per
unit of manufacturing Part 10541 is as follows:

Direct material P 2

Direct labor 8

Variable overhead 4

Fixed overhead applied 6

Total P20

Hamilton Company has offered to sell Emerald 5,000 units of Part 10541 for P19 a
unit. Emerald has determined that it could use the facilities currently used to
manufacture Part 10541 to manufacture Part RAC and generate an operating profit of
P4,000. Emerald has also determined that two-thirds of the fixed overhead applied
will continue even if Part 10541 is purchased from Hamilton. To determine whether to
accept Hamilton’s offer, the net relevant costs to make are

a. P70,000.

b. P84,000.

c. P90,000.

d. P95,000.

55. Harding Corporation manufactures batons. Harding can manufacture 300,000

batons a year at a variable cost of P750,000 and a fixed cost of P450,000. Based on
Harding's predictions, 240,000 batons will be sold at the regular price of P5.00 each.
In addition, a special order was placed for 60,000 batons to be sold at a 40 percent
discount off the regular price. The unit relevant cost per unit for Harding's decision is

a. P1.50.

b. P2.50.

c. P3.00.

d. P4.00.
56. Which of the following activities within an organization would be least likely to
be outsourced?

a. accounting

b. data processing

c. transportation

d. product design

57. An outside firm selected to provide services to an organization is called a

a. contract vendor.

b. lessee.

c. network organization.

d. centralized insourcer.