Question
Sewt878 Corporation makes an extra large port to use in one its fabulous products. A total of 15,500 unts of this extre large part are
Sewt878 Corporation makes an extra large port to use in one its fabulous products. A total of 15,500 unts of this extre large part are produced and used every year. The company's costs of producing the era large part at this level of activity are below: Direct materials Unit $3.40 Direct labor $8.00 Variable manufacturing overhead $8.50 Supervisor's salary 83.90 Depreciation of special equipment Allocated general overhead $2.30 $7.50 D877634) An outside suppler has offered to make the extra large part and sell it to Sewt878 for $26.70 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 extra large pert has no salvage value or other use. The allocated general overheed represents fixed costs of the endre Sew878 company, none of which would be avoided if the part were purchased instead of produced internally in addition, the spece used to make the extra large part could be used to make more of one of the company's other fabulous products, generating an additional segment margin of $27,500 per year for that product Q) What would be the annual financial advantage (disadvantage) for Sewt1878 Corp. as a result of buying the extra large part from the outside suppler? Multiple Choice O O O ($130,200) $27.500 ($70150) $17,450)
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