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14. You make component X in-house at a cost of $16 per unit, which consist of $2 direct labor per unit, $7 direct labor materials
14. You make component X in-house at a cost of $16 per unit, which consist of $2 direct labor per unit, $7 direct labor materials per unit, $6 fixed overhead per unit, and $1 variable overhead per unit. You need 1,000 units of X per month. An outside supplier has offered to sell component X to you at $12 per unit. If you outsource the production of X to the supplier, how much will your profit change in the short term? A. Increase by $2,000 per month B. Increase by $4,000 per month C. Increase by $12,000 per month D. Decrease by $4,000 per month E. Decrease by $2,000 per month 15. You budgeted to use 2 pounds of materials per unit. Budgeted input price was $10 per pound. Budgeted production and sales volume were 5,000 units. Actual input price was $9 per pound. This input price and input efficiency variances are: Input Price A. Input Efficiency Favorable Unfavorable Favorable Unfavorable Unfavorable Unfavorable Favorable Favorable Not enough information C. D. E. 16. After implementing activity-based costing to estimate customer-level technical support costs, ABC Company found that customer X is unprofitable. What are reasonably ways to deal with this customer? A. Charge the customer a higher price per unit (assume that you can charge different customers different prices for the same product or service) B. Limit the number of free technical-support calls per customer C. If nothing else works, "fire" the customer D. A and B only E. A, B, and C
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