Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Gordon Corporation produces 1,000 units of a part per year which are used in the assembly of one of its products. The total costs of

Gordon Corporation produces 1,000 units of a part per year which are used in the assembly of one of its products. The total costs of producing these parts is:

Variable manufacturing cost $ 15,000 Fixed manufacturing cost $ 12,000 Total manufacturing cost $ 27,000

The part can be purchased from an outside supplier at $20 per unit. If the part is purchased from the outside supplier, $8,000 of the total fixed costs incurred in producing the part can be avoided. The annual financial advantage (disadvantage) for the company as a result of buying the part from the outside supplier would be:

Group of answer choices

($5,000)

$7,000

($1,000)

$3,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

New Auditors Guide To Internal Auditing

Authors: Bruce R. Turner

1st Edition

1634540549, 978-1634540544

More Books

Students also viewed these Accounting questions

Question

Why is there credit risk in a repo transaction?

Answered: 1 week ago

Question

Decision Making in Groups Leadership in Meetings

Answered: 1 week ago