Vaughn, Inc. currently manufactures a wicket as its main product. The costs per unit are as follows: Direct materials and direct labor $17 Variable overhead 5 Fixed overhead 8 Total $30 Saran Company has contacted Vaughn with an offer to sell it 6900 of the wickets for $24 each. If Vaughn makes the wickets, variable costs are $22 per unit. Fixed costs are $8 per unit; however, $5 per unit is unavoidable. Should Vaughn make or buy the wickets? Make; savings = $6900 Make; savings = $13800 Buy; savings = $6900 Buy; savings = $20700
Vaughn, Inc. currently manufactures a wicket as its main product. The costs per unit are as follows: Direct materials and direct labor $17 Variable overhead 5 Fixed overhead 8 Total $30 Saran Company has contacted Vaughn with an offer to sell it 6900 of the wickets for $24 each. If Vaughn makes the wickets, variable costs are $22 per unit. Fixed costs are $8 per unit; however, $5 per unit is unavoidable. Should Vaughn make or buy the wickets? Make; savings = $6900 Make; savings = $13800 Buy; savings = $6900 Buy; savings = $20700
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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Vaughn, Inc. currently manufactures a wicket as its main product. The costs per unit are as follows:
Direct materials and direct labor | $17 |
Variable overhead | 5 |
Fixed overhead | 8 |
Total |
$30
|
Saran Company has contacted Vaughn with an offer to sell it 6900 of the wickets for $24 each. If Vaughn makes the wickets, variable costs are $22 per unit. Fixed costs are $8 per unit; however, $5 per unit is unavoidable. Should Vaughn make or buy the wickets?
Make; savings = $6900
Make; savings = $13800
Buy; savings = $6900
Buy; savings = $20700
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