Dexter Company manufactures part ZX used in several of its engine models. Monthly production costs for 10,000 units are as follows: Direct materials $80,000 Direct labor 20,000 Variable support costs 50,000 Fixed support costs 40,000 Total costs $190,000 It is estimated that 30% of the fixed support costs assigned to part ZX will no longer be incurred if the company purchases the part from the outside supplier. Dexter Company has the option of purchasing the part from an outside supplier at $16 per unit. If Dexter Company purchases 10,000 ZX parts from the outside supplier per month, then its monthly operating income will:
Dexter Company manufactures part ZX used in several of its engine models. Monthly production costs for 10,000 units are as follows: Direct materials $80,000 Direct labor 20,000 Variable support costs 50,000 Fixed support costs 40,000 Total costs $190,000 It is estimated that 30% of the fixed support costs assigned to part ZX will no longer be incurred if the company purchases the part from the outside supplier. Dexter Company has the option of purchasing the part from an outside supplier at $16 per unit. If Dexter Company purchases 10,000 ZX parts from the outside supplier per month, then its monthly operating income will:
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 3CMA: Aril Industries is a multiproduct company that currently manufactures 30,000 units of Part 730 each...
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Dexter Company manufactures part ZX used in several of its engine models. Monthly production costs for 10,000 units are as follows:
| Direct materials | $80,000 |
| Direct labor | 20,000 |
| Variable support costs | 50,000 |
| Fixed support costs | 40,000 |
| Total costs | $190,000 |
It is estimated that 30% of the fixed support costs assigned to part ZX will no longer be incurred if the company purchases the part from the outside supplier. Dexter Company has the option of purchasing the part from an outside supplier at $16 per unit.
If Dexter Company purchases 10,000 ZX parts from the outside supplier per month, then its monthly operating income will:
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