You make widgets, which is a subassembly for you main product of whatsup. An outside vendor has provided you with a quote to supply the widget part for $ 72.00per unitYour cost records show the following: Your projected production for the widget is 12,500units Item of CostPer Unit Cost Direct Material$18.75 Direct Labor$38.00 Variable manufacturing overhead$9.25 Lease on manufacturing facility$36,000.00per year Depreciation of equipment $2.50 Allocated Corporate Expenses$1.25 If this offer is accepted, you can sublease the manufacturing facility for$15,000per yearAll direct and variable costs can be avoided. The equipment has no salvage value How much would net operating income be changed if the outside supplier offer was accepted?Show all calculations for full credit

The company may decide to purchase the component from an outside supplier or it may decide to…

Answered: You make widgets, which is a…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 1PB: The following product costs are available for Stellis Company on the production of erasers: direct...

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You make widgets, which is a subassembly for you main product of whatsup. An outside vendor
has provided you with a quote to supply the widget part for		$ 72.00	per unit
Your cost records show the following:
Your projected production for the widget is		12,500	units
Item of Cost	Per Unit Cost
Direct Material	$18.75
Direct Labor	$38.00
Variable manufacturing overhead	$9.25
Lease on manufacturing facility	$36,000.00	per year
Depreciation of equipment	$2.50
Allocated Corporate Expenses	$1.25

If this offer is accepted, you can sublease the manufacturing facility for	$15,000	per year
All direct and variable costs can be avoided. The equipment has no salvage value
How much would net operating income be changed if the outside supplier offer was accepted?
Show all calculations for full credit

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