Waterway Music produces 59300 blank CDs on which to record music. The CDs have the following costs: Direct Materials $11000 Direct Labour 14200 Variable Overhead 2900 Fixed Overhead 7500 Waterway could avoid $3900 in fixed overhead costs if it acquires the CDs externally. If cost minimization is the major consideration and the company would prefer to buy the 59300 units externally, what is the maximum external price that Waterway would expect to pay for the units? $35600 $31700 $32000 $28100
Waterway Music produces 59300 blank CDs on which to record music. The CDs have the following costs: Direct Materials $11000 Direct Labour 14200 Variable Overhead 2900 Fixed Overhead 7500 Waterway could avoid $3900 in fixed overhead costs if it acquires the CDs externally. If cost minimization is the major consideration and the company would prefer to buy the 59300 units externally, what is the maximum external price that Waterway would expect to pay for the units? $35600 $31700 $32000 $28100
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Waterway Music produces 59300 blank CDs on which to record music. The CDs have the following costs:
Waterway could avoid $3900 in fixed overhead costs if it acquires the CDs externally. If cost minimization is the major consideration and the company would prefer to buy the 59300 units externally, what is the maximum external price that Waterway would expect to pay for the units?
| Direct Materials | $11000 |
| Direct Labour | 14200 |
| Variable Overhead | 2900 |
| Fixed Overhead | 7500 |
Waterway could avoid $3900 in fixed overhead costs if it acquires the CDs externally. If cost minimization is the major consideration and the company would prefer to buy the 59300 units externally, what is the maximum external price that Waterway would expect to pay for the units?
$35600
$31700
$32000
$28100
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