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

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类似问题

Part J88 is used in one of Quinney Corporation's products. The company makes 3,000 units of this part each year. The company's Accounting Department reports the following costs of producing the part at this level of activity:   An outside supplier has offered to produce this part and sell it to the company for $32.10 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $3,000 of these allocated general overhead costs would be avoided. If management decides to buy part J88 from the outside supplier rather than to continue making the part, what would be the annual impact on the company's overall net operating income? 

L Limited can subcontract out one of its components at $18 each. The business can produce the component internally for a variable cost of $14 per unit. In addition fixed costs have been allocated to components at $5 per component. L Limited has spare capacity. Should it make the component internally or contract it out?

Assume a company is considering buying 10,000 units of a component part rather than making them. A supplier has agreed to sell the company 10,000 units for a price of $41.50 per unit. The company’s accounting system reports the following costs of making the part:   Per Unit 10,000 Units per Year Direct materials $ 16 $ 160,000 Direct labor 12 120,000 Variable manufacturing overhead 2 20,000 Fixed manufacturing overhead, traceable 8 80,000 Fixed manufacturing overhead, allocated 4 40,000 Total cost $ 42 $ 420,000 One-half of the traceable fixed manufacturing overhead relates to supervisory salaries and the remainder relates to depreciation of equipment with no salvage value. If the company chooses to buy this component part from a supplier, then the supervisor who oversees its production would be discharged. What is the financial advantage (disadvantage) of buying 10,000 units from the supplier?

5. Which of the following is the most important reason for making a part internally as compared to sourcing it from a vendor?

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