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Al Co. currently makes 13.200 subcomponents a year in one of its factories. The unit costs to produce are: Direct materials Direct labor Variable manufacturing
Al Co. currently makes 13.200 subcomponents a year in one of its factories. The unit costs to produce are: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total unit cost Per unit $20 24 18 8 $70 An outside supplier has offered to provide A1 with the 13,200 subcomponents at an $70 per unit price. Fixed overhead is not avoidable. If A1 accepts the outside offer what will be the effect on short- term profits? Multiple Choice $620,000 increase $105,600 decrease $105,500 increase $105.600 decrease
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