265. CSO: 2C2g LOS: 2C2o Aspen Company plans to sell 12,000 units of product XT and 8,000 units of product RP. Aspen has a capacity of 12,000 productive machine hours. The unit cost structure and machine hours required for each product is as follows. Unit Costs XT RP Materials $37 $24 Direct labor 12 13 Variable overhead 6 3 Fixed overhead 37 38 Machine hours required 1.0 1.5 Aspen can purchase 12,000 units of XT at $60 and/or 8,000 units of RP at $45. Based on the above, which one of the following actions should be recommended to Aspen's management? a. Produce XT internally and purchase RP. b. Produce RP internally and purchase XT. c. Purchase both XT and RP. d. Produce both XT and RP.

2C2O ASPEN COMPANY PLANS TO SELL 12,000 UNITS OF PRODUCT XT AND 8,000...

CMA EXAM SUPPORT PACKAGE 2

265.

CSO: 2C2g

LOS: 2C2o

Aspen Company plans to sell 12,000 units of product XT and 8,000 units of product RP.

Aspen has a capacity of 12,000 productive machine hours. The unit cost structure and

machine hours required for each product is as follows.

Unit Costs

Materials

$37

$24

Direct labor

Variable overhead

Fixed overhead

Machine hours required

1.0

1.5

Aspen can purchase 12,000 units of XT at $60 and/or 8,000 units of RP at $45. Based on

the above, which one of the following actions should be recommended to Aspen's

management?

Produce XT internally and purchase RP.

Produce RP internally and purchase XT.

Purchase both XT and RP.

Produce both XT and RP.