VaughnCo. produces 5400 units of part Alpha-E for use in one its products. The following costs are incurred at that level of production: Direct materials $58000 Direct labor 170000 Variable overhead 85000 Fixed overhead 168000 If Vaughn buys the part from an outside supplier, $45000 of the fixed overhead is avoidable. The outside supplier has offered to sell the units at $64 per unit. The increase (decrease) in net income from purchasing the part from the outside supplier would be $12400 decrease $12400 increase $79600 decrease O $74600 increase
VaughnCo. produces 5400 units of part Alpha-E for use in one its products. The following costs are incurred at that level of production: Direct materials $58000 Direct labor 170000 Variable overhead 85000 Fixed overhead 168000 If Vaughn buys the part from an outside supplier, $45000 of the fixed overhead is avoidable. The outside supplier has offered to sell the units at $64 per unit. The increase (decrease) in net income from purchasing the part from the outside supplier would be $12400 decrease $12400 increase $79600 decrease O $74600 increase
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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![VaughnCo. produces 5400 units of part Alpha-E for use in one its products. The following costs are incurred at that level of production:
Direct materials $58000
Direct labor
170000
Variable overhead
85000
Fixed overhead
168000
If Vaughn buys the part from an outside supplier, $45000 of the fixed overhead is avoidable. The outside supplier has offered to sell the
units at $64 per unit.
The increase (decrease) in net income from purchasing the part from the outside supplier would be
$12400 decrease
$12400 increase
$79600 decrease
O $74600 increase](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F525160ef-b5ca-4838-a6fc-741d8056b794%2Ff61a5096-6236-48e0-8ed3-6f0c4617c62c%2Fsft66g4_processed.png&w=3840&q=75)
Transcribed Image Text:VaughnCo. produces 5400 units of part Alpha-E for use in one its products. The following costs are incurred at that level of production:
Direct materials $58000
Direct labor
170000
Variable overhead
85000
Fixed overhead
168000
If Vaughn buys the part from an outside supplier, $45000 of the fixed overhead is avoidable. The outside supplier has offered to sell the
units at $64 per unit.
The increase (decrease) in net income from purchasing the part from the outside supplier would be
$12400 decrease
$12400 increase
$79600 decrease
O $74600 increase
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