Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

question 2 . A total of 11,000 units of Part N29 are internally produced and used every year, and the following is the cost report:

question 2. A total of 11,000 units of Part N29 are internally produced and used every year, and the following is the cost report:

direct material ---------------- $5.90 per unit

direct labor---------------- $1.70 per unit

variable manufacturing overhead---------------- $5.40 per unit

supervisor salary ---------------- $2.60 per unit

depreication for specal equipment ---------------- $3.20 per unit

allocated general overhead---------------- $3.30 per unit An outside supplier has offered to make the part and sell it to the company for $21.20 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including the direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased. What would be the impact on income for buying part N29 from the supplier?

A. Net operating income would decline by $29,900 per year. B. Net operating income would increase by $29,000 per year. C. Net operating income would decline by $61,600 per year. D. Net operating income would increase by $61,600 per year.

(please show detailed steps)

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

Step: 3

blur-text-image

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

Clinical Audit In Physiotherapy From Theory Into Practice

Authors: Sue Barnard MSc MCSP, Gayle Hartigan

1st Edition

075063779X, 978-0750637794

More Books

Students also viewed these Accounting questions

Question

Discuss the goals of financial management.

Answered: 1 week ago