Green Company produces 1,000 parts per year, which are used in the assembly of one of its products. The unit product cost of these parts is: Variable manufacturing cost $12 Fixed manufacturing cost $9 Unit Product cost (total) $21 The part can be purchased from an outside supplier for $20 per unit. If the part is purchased from the outside supplier, two-thirds of the fixed manufacturing costs can be eliminated. What will be the annual impact on the company's operating income of buying the part from the outside supplier.单项选择题

A

$2,000 decrease

B

$5,000 increase

C

$1,000 decrease

D

$1,000 increase

登录即可查看完整答案

我们收录了全球超50000道真实原题与详细解析,现在登录,立即获得答案。

类似问题

Using the above information for Pikachu Advisory - should the business complete the work in-house or outsource to maximise profit?

Using the BAPE example above, the supplier gets back in touch with the company after being told that the company decided to continue manufacturing their t-shirts. The external supplier says that they can go cheaper and offer the t-shirts for $16. What should BAPE do?

BAPE has a range of hoodies, t-shirts and pants. They currently make their t-shirts and then apply designs on them. To free up capacity to make more hoodies - the business is considering purchasing t-shirts from an external supplier. An external supplier will charge $18 per t-shirt.  BAPE has the following costs when they manufacture their t-shirts Fabric - 1m2 at a cost of $10 per m2 Labour - 15 minutes at a cost of $20 per hour Variable overhead - $2 per t-shirt Fixed overhead of $20,000 which works out to $5 per t-shirt If BAPE chooses to buy from an external supplier - they will still have to pay for the fixed overhead. Using the quantitative information provided, should BAPE make or buy their t-shirts?

Part R56 is used in one of Parker Corporation’s products. The company makes 5,000 units of this part each year. The company’s Accounting Department reports the following costs of producing the part at this level of activity: Part R56 data Cost Per Unit / Per Year Direct materials $12.20 per unit Direct labor $8.10 per unit Variable manufacturing overhead $4.70 per unit Supervisor’s salary $22,000 per year Allocated general overhead $5.40 per unit An outside supplier has offered to make the part and sell it to the company for $27.80 each. If this offer is accepted, the supervisor’s salary and all variable manufacturing costs would be avoided. In addition, $6,000 of the allocated general overhead would be avoided. If management decides to buy part R56 from the outside supplier rather than continue making it, what would be the annual impact on the company’s overall net operating income?

更多留学生实用工具

加入我们，立即解锁 海量真题 与 独家解析，让复习快人一步！