Melody manufacturing is currently producing 1,000 component parts by incurring costs of $68,000 for direct materials, $30,000 for direct labor, $18,000 for variable overhead, and $20,000 for fixed overhead. melody could eliminate $12,000 of fixed overhead costs if the components were purchased externally. melody wishes to minimize costs and would prefer to purchase the components. what is the maximum amount melody should pay to acquire 1,000 components?

$124,000

Explanation:

The maximum amount that Melody should pay to acquire 1,000 components is the total of all relevant costs directly attributable to manufacture the components. Such as;

Direct materials $68,000

Direct labor 30,000

Variable overhead 18,000

Fixed overhead 8,000

($20,000-$12,000)

$124,000

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

answer; /// egg production using the factory technique falls less than with the free range technique;