Your Company makes 35,000 motors to be used in the production of its sewing machines. The cost per motor at this level of activity is: Direct materials $4.50 Direct labor $4.60 Variable manufacturing overhead $3.75 Fixed manufacturing overhead $3.40 An outside supplier has offered to supply all the motors the company needs for $15 each. If Your Company decides to buy the motors, there would be no other use for the production facilities and 25% of the fixed manufacturing overhead cost could be avoided. If Your Company decides to buy the motor, what is the change in net income net operating income? OA $45,500 O B.S 14.000 OC. (S14.000) O D.(545.500)
Your Company makes 35,000 motors to be used in the production of its sewing machines. The cost per motor at this level of activity is: Direct materials $4.50 Direct labor $4.60 Variable manufacturing overhead $3.75 Fixed manufacturing overhead $3.40 An outside supplier has offered to supply all the motors the company needs for $15 each. If Your Company decides to buy the motors, there would be no other use for the production facilities and 25% of the fixed manufacturing overhead cost could be avoided. If Your Company decides to buy the motor, what is the change in net income net operating income? OA $45,500 O B.S 14.000 OC. (S14.000) O D.(545.500)
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 6EB: Country Diner currently makes cookies for its boxed lunches. It uses 40,000 cookies annually in the...
Related questions
Question
Transcribed Image Text:Your Company makes 35,000 motors to be used in the production of its sewing machines. The cost per motor at this level of activity is:
Direct materials
$4.50
Direct labor
$4.60
Variable manufacturing overhead
$3.75
Fixed manufacturing overhead
$3.40
An outside supplier has offered to supply all the motors the company needs for $15 each. If Your Company decides to buy the motors, there would be no other use for the production facilities and 25% of the fixed manufacturing overhead cost could be avoided. If Your Company
decides to buy the motor, what is the change in net income net operating
income?
O A. $45,500
O B. $ 14,000
O C. ($14,000)
O D. ($45,500)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Essentials of Business Analytics (MindTap Course …
Statistics
ISBN:
9781305627734
Author:
Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Essentials of Business Analytics (MindTap Course …
Statistics
ISBN:
9781305627734
Author:
Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning