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Portland State University Operations And Supply Chain Management Assignment Help - Kirsten Corporation


Question - Kirsten Corporation makes 100,000 units per year of a part called a B345 gasket for use in one of its
products. Data concerning the unit production costs of the B345 gasket follow:

direct materials .... 0.15
direct labor .... 0.10
variable manufacturing overhead ..... 0.13
fixed manufacturing overhead .... 0.24

total manufacturing cost per unit .... 0.62

An outside supplier has offered to sell Kirsten Corporation all of the B345 gaskets it requires. If
Kirsten Corporation decided to discontinue making the B345 gaskets, 25% of the above fixed
manufacturing overhead costs could be avoided.

Required:

Assume Kirsten Corporation has no alternative use for the facilities presently devoted to production of
the B345 gaskets. I ...Read More

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