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Each month, Triton Industries produces and sells 15,000 units of a product called Zonetooth. The selling price of Zonetooth is $20 per unit, and variable
Each month, Triton Industries produces and sells 15,000 units of a product called Zonetooth. The selling price of Zonetooth is $20 per unit, and variable expenses are $14 per unit. Due to demand forecasts, Triton is considering if Zonetooth should be discontinued. Analysis shows that $70,000 of the $100,000 in fixed expenses charged to Zonetooth would continue even if the product were discontinued. These data indicate that if Zonetooth is discontinued, the company's overall net operating income would: A) decrease by $60,000 per month. B) increase by $20,000 per month. C) decrease by $20,000 per month. OD) increase by $10,000 per month. Stonehedge Inc. manufactures 20,000 units of a certain part to use in one of its products. The costs to manufacture the part includes: Variable MOH Direct labour Fixed MOH Direct materials Total cost $8 16 10 4 $38 Davidson Industries approached Stonehedge Inc. and offered to sell this part to the company for $36 each. If Stonehedge Inc. buys the part from Davidson instead of making it, Stonehedge Inc. would not have any use for the capacity available. In addition, 60% of the fixed manufacturing overhead costs will continue regardless of what decision is made. Assume that direct labour is an avoidable cost in this decision. What are the total relevant costs to make the part? OA) $720,000. OB) $760,000. OC) $560,000. OD) $640,000
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