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Question 4 2 pts Zip Products currently makes a product in house. Costs to make the product are: direct materials, $2.10; direct labor, $0.50; manufacturing
Question 4 2 pts Zip Products currently makes a product in house. Costs to make the product are: direct materials, $2.10; direct labor, $0.50; manufacturing overhead, $1.80. An outside supplier has offered to sell them the product for $3.50 per unit. Direct material and direct labor are traceable to the product and would be eliminated. Of the $1.80 of overhead only $0.80 could be eliminated. They currently produce 10,000 units. What would be the effect of purchasing from and outside supplier? $9,000 $19,000) $(1,000) $1,000 Question 5 2 pts They are considering dropping the in-store games divisions so they can focus on online games. Below is a segmented income statement for the in-store games division. Sales $ 121,000 Variable expenses 90.600 Contribution margin 30,400 Administrative expenses 18,990 General expenses 21,600 Net income $ (10,190) All of the administrative expenses are for administrative functions that service both divisions. These expenses would not be eliminated if the in-store division were dropped. If the in-store division were dropped, what would be the effect on the company related to administrative expenses? $18,990 Not enough information to determine $(18,990) $0
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