Your Company produces 1,000 parts per year, which are used in the assembly of one of its products. The unit product cost of these parts is: Variable manufacturing costs $12.00 Fixed manufacturing costs $9.00 Total per unit product cost $21.00 The part can be purchased from an outside supplier at $20 per unit. If the part is purchased from the outside supplier, two thirds of the fixed manufacturing costs can be eliminated. The annual impact on the company's net operating income as a result of buying the part from the outside supplier would be: a. $1,000 increase b. $1,000 decrease c. $5,000 increase d. $2,000 decrease
Your Company produces 1,000 parts per year, which are used in the assembly of one of its products. The unit product cost of these parts is: Variable manufacturing costs $12.00 Fixed manufacturing costs $9.00 Total per unit product cost $21.00 The part can be purchased from an outside supplier at $20 per unit. If the part is purchased from the outside supplier, two thirds of the fixed manufacturing costs can be eliminated. The annual impact on the company's net operating income as a result of buying the part from the outside supplier would be: a. $1,000 increase b. $1,000 decrease c. $5,000 increase d. $2,000 decrease
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 6MC: Jansen Crafters has the capacity to produce 50,000 oak shelves per year and is currently selling...
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Your Company produces 1,000 parts per year, which are used in the assembly of one of its products. The unit product cost of these parts is:
| Variable |
$12.00 |
| Fixed manufacturing costs | $9.00 |
| Total per unit product cost | $21.00 |
The part can be purchased from an outside supplier at $20 per unit. If the part is purchased from the outside supplier, two thirds of the fixed manufacturing costs can be eliminated. The annual impact on the company's net operating income as a result of buying the part from the outside supplier would be:
a. $1,000 increase
b. $1,000 decrease
c. $5,000 increase
d. $2,000 decrease
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