Question
The Chateau Company manufactures 4,000 telephones per year. The full manufacturing costs per telephone are as follows: Direct materials $ 4 Direct labor 16 Variable
-
The Chateau Company manufactures 4,000 telephones per year. The full manufacturing costs per telephone are as follows:
Direct materials $ 4 Direct labor 16 Variable manufacturing overhead 12 Average fixed manufacturing overhead 12 Total $44
The Quick Assembly Company has offered to sell Chateau 4,000 telephones for $31 per unit. If Chateau accepts the offer, $20,000 of fixed overhead will be eliminated. Chateau should: Make the telephones; the savings is $4,000
Buy the telephones; the savings is $35,000
Buy the telephones; the savings is $24,000
Make the telephones; the savings is $24,000
The Chateau Company manufactures 4,000 telephones per year. The full manufacturing costs per telephone are as follows:
| Direct materials | $ 4 |
| Direct labor | 16 |
| Variable manufacturing overhead | 12 |
| Average fixed manufacturing overhead | 12 |
| Total | $44 |
| Make the telephones; the savings is $4,000 |
| Buy the telephones; the savings is $35,000 |
| Buy the telephones; the savings is $24,000 |
| Make the telephones; the savings is $24,000 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Managerial Economics Foundations of Business Analysis and Strategy
Authors: Christopher Thomas, S. Charles Maurice
11th edition
978-0078021718
