A company manufactures 10,000 microwave ovens every period. Each of the ovens requires a timer. The company currently manufactures the 10,000 timers with the following cost: direct materials $40,000, direct labor $50,000, variable overhead $20,000, fixed overhead $60,000 (the fixed overhead is only 50% avoidable if the company stops making timers). An external supplier offers the company to supply the timers for $15 each. What will be the effect on the company's profit if it decides to buy the timers instead of making them?

$10,000 decrease

$20,000 increase

$30,000 decrease

$30,000 increase

A company manufactures two joint products, A and B, from a common input. At the split-off point, A unit of product A can be sold for $10 and a unit of product B can be sold for $12. However, if $7 of further processing per unit is spent on product A, it can be sold for $15 per unit; and if $9 of further processing per unit is spent on product B, it can be sold for $25 per unit. Which of the products should be processed further?. Single choice.

Only A

Only B

Both A and B

None of the products