Give me correct answer and explanation.h Munoz Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-qualityracing bikes with limited sales. Munoz produces and sells only 6,900 bikes each year. Due to the low volume of activity, Munoz isunable to obtain the economies of scale that larger producers achieve. For example, Munoz could buy the handlebars for $33 each;they cost $36 each to make. The following is a detailed breakdown of current production costs.ItemUnit-level costsUnit CostTotalMaterials$16$110,400Labor855,200Overhead213,800Allocated facility-level costsTotal1069,000$36$248,400After seeing these figures, Munoz's president remarked that it would be foolish for the company to continue to produce thehandlebars at $36 each when it can buy them for $33 each.RequiredCalculate the total relevant cost. Do you agree with the president's conclusion?Per UnitTotalTotal relevant costDo you agree with the president's conclusion?

The overhead rate is a cost that is allocated to the product or service at the time of production.…

Answered: Munoz Bicycle Manufacturing Company…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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