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Some of cjps facilities could be rented to a third party

The CJP Company produces 10,000 units of item S10 annually at a total cost of $190,000.

Direct materials	$20,000
Direct labor	$55,000
Variable overhead	$45,000
Fixed overhead	$70,000
Total	$190,000

The XYZ Company has offered to supply 10,000 units of S10 per year for $18 per unit. If CJP accepts the offer, $4 per unit of the fixed overhead would be saved. In addition, some of CJP's facilities could be rented to a third party for $15,000 per year. What are the relevant costs for the "make" alternative?

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Accounting Basics: Some of cjps facilities could be rented to a third party

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